/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/011217.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, December 17, 2001, Vol. 2, No. 245 Headlines * B E L G I U M * SABENA SA: Viable Rescue Becoming Dimmer as Investors Back Out * G E R M A N Y * BIODATA INFORMATION: Considers Debt Write-Off KIRCHGUPPE: Liberty's Malone Willing to Help Kirch KIRCHGRUPPE: Two Banks Threaten to Exit Credit Cap MAN AG: Rupprecht Faces Pressures From Shareholders PIXELPARK AG: Bertelsmann Offers 15MM-Euro Loan PIXELPARK AG: Will Concentrate on Core Business * I R E L A N D * AER LINGUS: Deal Grants Employees 15% of State Carrier * N E T H E R L A N D S & KPN NV: TetraNed Wins Orders With Government * N O R W A Y * ENITEL ASA: Ought Not to Have Spent Share Issue Capital * P O L A N D * LOT AIRLINES: BA Denies Eyeing LOT Stake * U N I T E D K I N G D O M * BALTIMORE TECHNOLOGIES: Ex-CEO Claims Damages for Barbs BRITISH AIRWAYS: Falls 11% as Investors Show Concern BRITISH TELECOM: Oftel Permits Open Access to BT Exchanges BRITISH TELECOM: Sir Christopher Defends Choice of Verwaayen COLT TELECOM: Tumbles 11% as New Shares Commence LSE Trading CONSIGNIA: Chided for Failure to Consult on Job Cuts CONSIGNIA: Loses 500-MM-Pound TV License Contract GLOBAL TELESYSTEMS: Judge Delays GTS Sale to KPNQwest JOHN LAING: Names Bill Forrester as Executive Chairman MARCONI PLC: Will Invest 15MM Pounds to Overhaul Payphones NTL INCORPORATED: Bankers Shaken by Downgrade Rating NTL INCORPORATED: Disappointed With Market Reports NTL INCORPORATED: May Cut Capital Spending to Survive RAGE SOFTWARE: Eidos Drags Down Rage Shares RAILTRACK GROUP: Prideaux Refuses Chairmanship Offer RAZORFISH INC.: Divests European Operations ============= B E L G I U M ============= SABENA SA: Viable Rescue Becoming Dimmer as Investors Back Out -------------------------------------------------------------- Creditors of Sabena Interservices Center withdrew their support for its business plan, hammering what could be the proverbial last nail on Sabena's coffin. According to the Financial Times, many creditors believe the business plan is "unrealistic." Right now, SIC is under Chapter 11-type protection and must present a viable business plan to avoid bankruptcy. A bankruptcy would harm the resurrection of Sabena through DAT because the latter owes it US$98.8 million. In addition, DAT is counting on SIC for an additional financing of US$89.8 million to complete the recovery program. A Brussels commercial court last week scheduled SIC's next solvency hearing for December 18. Meanwhile, the report says chances for a substantial private sector counterpart in the rescue efforts are getting dimmer. The report notes that many people believe the airline is heading for bankruptcy and that "a lot of people would rather not pay up this money," a reference to the US$180 million expected from private companies. ============= G E R M A N Y ============= BIODATA INFORMATION: Considers Debt Write-Off --------------------------------------------- Debt laden Biodata Information Technology AG, which filed for insolvency in November, plans to transfer its operative business to a 100% subsidiary company to free its property of debts. According to preliminary insolvency administrator Dr. Fritz Westhelle, the recapitalization of Biodata AG necessitates regular insolvency proceedings. Furthermore, the IT security company requires the help of a financial investor for a successful insolvency plan. Additional requirements are a reduction prior to an increase of the company's capital. This puts an investor into the position to obtain the majority of shares of a debt-free company. Westhelle said he needed to act fast in order to keep important employees with the company and to continue operative business. In line with the Supervisory Board and the Board of Directors, he affirmed plans to transfer parts of the operative business to a subsidiary company within the next days. This company will be based in Dresden and focus on encryption products. There are MBO negotiations concerning the Biodata affiliate in Nuremberg, whereas the subsidiary companies in Offenbach and Munich filed insolvency applications. Biodata's former core technology for network and communications security will be transferred to a corporation based in Frankenberg-Schreufa. Consequently, Biodata AG will be restructured into a management company holding investments in the new Dresden based subsidiary (100%), Cobion AG (circa 36%) and BioID AG (16.2%). For information, contact Jorg Kleine (Investor Relations), Biodata Information Technology AG, Burg Lichtenfels, 35104 Lichtenfels, telephone +49 (0) 6454 / 9120-132, fax +49 (0) 6454 / 9120-180, or email joerg.kleine@biodata.de KIRCHGUPPE: Liberty's Malone Willing to Help Kirch -------------------------------------------------- John Malone, chairman of U.S. company Liberty Media Corporation, has been in talks to help debt-laden KirchGuppe. According to a report from the Financial Times, Malone expressed interest to buy News Corp's stake in Kirch's pay TV business in November. Previous attempt of Liberty to enter the German media market through an approval of a proposed $5 billion purchase of Deutsche Telekom's cable assets did not win the German regulator's approval. German Cartel Office chairman Ulf Boge said that due to concerns which have not yet been cleared regarding the deal, Malone's attempt to take a stake in Kirch remain uncertain. KirchGruppe debts are estimated to be between 4 billion and 7 billion, most of which is in the form of loans with German banks. Meanwhile, French broadcaster TF1 has held discussions with Kirch to buy the German company's 25% stake in Spanish broadcaster Telecinco at the price of $458 million. KIRCHGRUPPE: Two Banks Threaten to Exit Credit Cap -------------------------------------------------- At least two more German banks plans to cap their credit lines to Kirch and follow Dresdner Bank's example by demanding the cash- strapped media giant to repay its loans, the Agence France-Presse reported. The newspaper did not name the banks but said they were set to call in their debts in the first three months of next year. Earlier, Dresdner Bank was demanding that Kirch repay its loan by the end of the year, a move that caused worries about Kirch's liquidity. If other banks do indeed follow suit, Kirch could collapse under the weight of its debt, which analysts estimate to be between 4 and 7 billion euros. MAN AG: Rupprecht Faces Pressures From Shareholders --------------------------------------------------- With changes in tax legislation taking place on January 1, the pressures are increasing on MAN AG Chairman Rudolf Rupprecht. According to a report from the Financial Times, some of the shareholders of MAN are unhappy about Rupprecht's approach to running the struggling German truck maker, based around maintaining a broad collection of engineering interests from trucks to printing machines. There has been speculation that the company's main shareholder, an investment consortium called Regina that includes Allianz, Commerzbank and Munich Re, could sell some of its 36% stake in the company's voting shares after new tax legislation takes effect next month. The change abolishes the capital gains tax that investment groups and companies have to pay when selling businesses. A banker familiar with MAN says that Rupprecht has refused to bow to pressure to sell off some of the group's operations and to focus its activities. Already, the company has issued four profit warnings due to falling orders this year. PIXELPARK AG: Bertelsmann Offers 15MM-Euro Loan ----------------------------------------------- Media conglomerates Bertelsmann AG will provide Pixelpark AG with a second-ranking loan of 15 million euros in order to finance the measures and stabilize the cash flow situation of the Berlin- based Web site designer and Internet consultant. In this way, Bertelsmann is supporting the strategic and organizational focus of Pixelpark in difficult market conditions, with the aim of achieving sustained profitability. 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. PIXELPARK AG: Will Concentrate on Core Business ----------------------------------------------- In response to the current market situation and the continuing restrained demand for IT services, Pixelpark AG will in future concentrate on its core business. Pixelpark AG said in a statement it would position itself as an innovative service provider, specializing in the realization of customer-specific Internet benefits. The emphasis will be on projects for the concept planning and implementation of portals, marketing Web sites, e-shops and multi-channel solutions. As a result, Pixelpark AG would withdraw from its business operations in Spain and Great Britain, affecting around 600 employees. A slump in market demand for Web sites and some organizational problems brought Pixelpark to its downfall. ============= I R E L A N D ============= AER LINGUS: Deal Grants Employees 15% of State Carrier ------------------------------------------------------ The final part of a special share deal for remaining Aer Lingus staff members was welcomed by the government, company and unions, with the workforce set to own 15% of the State carrier, the Irish Independent newspaper reported. Under the deal, Aer Lingus will buy back the existing 4.7% already held by individual staff. Those shares, plus an extra 10.3% stake, will be transferred to a new Employee Share Ownership Trust (ESOT) that will be entitled to a 10% share of future profits up to 20 million pounds. The shares are being transferred in return for agreed working flexibilities and a 15-month postponement of the Program for Prosperity and Fairness pay increases. ===================== N E T H E R L A N D S ===================== KPN NV: TetraNed Wins Orders With Government -------------------------------------------- TetraNed, a 50-50 joint venture of debt-laden Dutch telecom group Royal KPN NV and IT consultant Getronics NV, won orders worth nfl500 million with the Dutch government. According to an AFX News report, the orders involve installation of a new national digital radio system for emergency services in the Netherlands, such as fire, police and ambulance. The government has already approved the project, which should be operational by 2003. KPN has been disposing its non-core asset to reduce its debt pile of 22 billion euros. =========== N O R W A Y =========== ENITEL ASA: Ought Not to Have Spent Share Issue Capital ------------------------------------------------------- Insolvent telecom and data services supplier Enitel erroneously spent 335 of the 700 million Norway krone raised through a crisis share issue in May/June. According to a report from Dagens Naeringsliv and FT Information, the management and board of Enitel will soon receive letters from the company demanding repayment. Enitel believes the board acted wrongly when it used part of the 700 million Norway krone from the share issue to cover losses. The company added that the board ought to have been aware that it was insolvent at that stage. Enitel will take legal action if it is not satisfied with the feedback from its board and management, which has been given two weeks to respond. =========== P O L A N D =========== LOT AIRLINES: BA Denies Eyeing LOT Stake ---------------------------------------- British Airways Plc said it is not looking at buying a stake in Polish national airline PLL LOT, after the Polish government said it was interested. According to a report from Reuters, Polish Deputy Infrastructure Mnister Andrzej Pilat said that Deutsche Lufthansa AG and British Airways might buy Swissair's 25.1% stake in LOT. Lufthansa declined comment on the potential purchase. British Airways, like almost all of the world's airlines, is financially struggling following a sector-wide slump caused by the September 11 attacks in the United States. LOT, whose net loss more than tripled to 252 million zlotys in the first half of this year compared with the same period of 2000, received $90 million (62 million pounds) in emergency aid from the Polish government last month. =========================== U N I T E D K I N G D O M =========================== BALTIMORE TECHNOLOGIES: Ex-CEO Claims Damages for Barbs ------------------------------------------------------- Cash-strapped e-security provider Baltimore Technologies says it is going to mount a vigorous defense against the damage suit filed recently by former Chief Executive Fran Rooney. The suit, according to the Financial Times, was filed on November 23 with the High Court over claims that the company had breached a "compromise agreement" inked with the former CEO. The agreement, which was signed before Rooney stepped down in May, allegedly stipulated that neither party could criticize the other. During an interview in October, new CEO Bijan Khezri told the Financial Times: "This company has been paying outrageous salaries. Fran Rooney was paid 450,000 pounds ($643,500). No senior executive, including myself, should be paid more than 150,000 pounds." Mr. Khezri also criticized the US$998 million acquisition of e- mail security group Content Technologies, saying the deal did not "make any sense." The company is now trying to unload Contact, which analysts believe will only fetch between US$57 million and US$72 million. The Financial Times says the outcome of the case depends on whether Mr. Khezri's remarks were directed at the group as a whole or at Mr. Rooney personally. BRITISH AIRWAYS: Falls 11% as Investors Show Concern ---------------------------------------------------- British Airways Plc fell as much as 11% to 189p on Thursday's trading, extending a three-day loss to 14% as investors are concerned about price cuts from low-fare rivals and an internal review of the airline's businesses, Bloomberg reported. Europe's largest airline said it might slash more employees in February 2002 as earnings sank because of the drop in passengers. BA already has announced 7,000 job cuts since September. The airline is also considering a 1-billion-pound rights offer, dropping unprofitable European routes, scaling back operations at London Gatwick airport and divesting its 25% stake in the Australian carrier Qantas Airways Ltd, as part of its restructuring program. BRITISH TELECOM: Oftel Permits Open Access to BT Exchanges ---------------------------------------------------------- Britain's telecom regulator has allowed contractors from BT Group's rival companies to have open access to the former monopoly's phone exchanges in order to provide broadband access to customers. According to a report from Reuters, BT had objected to unescorted access in its local loop on the grounds of security. Oftel director general David Edmonds said that the arrangements would not jeopardize the security at BT's exchanges or of the wider telecoms network. Easynet, along with Fibernet, Kingston Communications, Redstone Telecom and Bulldog Communications, is applying to unbundle local loop lines. BRITISH TELECOM: Sir Christopher Defends Choice of Verwaayen ------------------------------------------------------------ British Telecommunications Chairman Sir Christopher Bland is standing by his choice of Ben Verwaayen as the company's new chief executive, despite the cautious reception from investors. In a Financial Times report, Sir Christopher was quoted defending Mr. Verwaayen's track record: "We knew when we said that we wanted telecoms experience that anyone coming from a telecoms background would be coming from companies whose share price was, to put it mildly, unlikely to be at its height in the last two years." The 49-year old Verwaayen comes from Lucent Technologies, where he held the position of vice chairman. Before that, he headed KPN subsidiary PTT Telecom for 10 years as president and managing director. Both companies are now in a tight financial fix. Following the announcement of Mr. Verwaayen's appointment, the company's share fell 4_p to 256�p, reflecting concerns that he may not be the right man for the job. "Investors were looking for a big hitter," said one analyst, who also disclosed that the first reaction among investors was to ask, "Who is he?" Mr. Verwaayen will formally join the company on January 14, but will take over the helm only two week later. His main goal is to add value to the company's service. He is set to receive up to US$15.8 million annually over three years if he meets his performance targets and is tied to the company during the period. He is also given an annual share option worth four times his US$1 million salary. COLT TELECOM: Tumbles 11% as New Shares Commence LSE Trading ------------------------------------------------------------ Colt Telecom Group Plc shares fell as much as 11% to 122p on Thursday's trading after new shares of the cash-strapped company started trading on the London Stock Exchange, Bloomberg reported. The London-based company raised 494 million pounds by selling 633 million new shares a week earlier. Colt Telecom is a provider of voice and data services to businesses in 13 European countries. CONSIGNIA: Chided for Failure to Consult on Job Cuts ---------------------------------------------------- A trade minister has rebuked Consignia, the troubled post office group, for announcing plans to layoff up to 30,000 staff members without forewarning or consulting postal unions. The Financial Times reported that the Communications Workers' Union has threatened to call a strike ballot unless the financially troubled post office group withdrew its statement. The union threat was later dropped after Consignia chief executive John Roberts said that the 30,000 figure was a theoretical maximum and promised to consult the unions on the company's firm proposals. Earlier, the MSF union, which represents 15,000 managers and senior managers within the company, has called for suspension of the dividend payment to government in view of Consignia's projected losses. The action could provide some 250 million pounds short-term financial relief to assist the post office group to address its current problems. CONSIGNIA: Loses 500-MM-Pound TV License Contract ------------------------------------------------- The Post Office lost a 500-million-pound contract to handle license services for BBC after the parent company, Consignia, failed tom make a shortlist of bidders. The Times newspaper reports that the ten-year contract has gone to Capita, the support services group that has won many big outsourcing contracts from the public sector. About 15,000 Post Office employees in Bristol will transfer to Capita. Members of the public will still be able to buy television licenses at the Post Office, the paper adds. GLOBAL TELESYSTEMS: Judge Delays GTS Sale to KPNQwest ----------------------------------------------------- U.S. Bankruptcy Judge Erwin Katz in Wilmington, Delaware delayed the $568 million sale of Global TeleSystems Inc. to rival KPNQwest NV, Bloomberg reported. The move allows other potential bidders to make an offer for the telecommunications company until January 7. Investors have questioned whether KPNQwest of the Netherlands was underpaying for the London-based telecommunications provider. Global TeleSystems filed for Chapter 11 protection in November, a month after creditors went to bankruptcy court to force the company to liquidate. As part of the bankruptcy case, Global Telesystems executives seek to sell the company's Ebone and GTS Central Europe operating units to KPNQwest NV for $568 million. JOHN LAING: Names Bill Forrester as Executive Chairman ------------------------------------------------------ John Laing plc, the construction investment group, said Friday it has appointed Bill Forrester to the Board as a Director from January 1, 2002, prior to becoming Executive Chairman in February. Forrester is currently Group Chief Executive of SIG plc, a European distributor of insulation, ceiling, partitioning and roofing products, from which position he will retire at the end of this year. He was Managing Director at Kuwait Insulation Manufacturing Company, and Sales and Marketing Director at BP Rockwool Limited. For the first half of 2001, Laing's construction arm posted an operating loss of 82.1 million pounds, which resulted in a 50% fall in the firm's share price to 112p. The figure also forced the company to restructure its finances. For further information, contact Sir Martin Laing at telephone 020-8959-3636 or Nick Dillon of ING Barings at 020-7767-1000. MARCONI PLC: Will Invest 15MM Pounds to Overhaul Payphones ---------------------------------------------------------- Marconi, which has been struggling to reduce its debt burden of more than 3 billion pounds, will invest up to 15 million pounds to overhaul the traditional U.K. payphone. According to a Financial Times report, the embattled telecoms equipment maker will build 28,000 terminals capable of sending e- mails, text messages and surfing the Internet to replace some of British Telecom's 90,000 payphones. Payphone usage has dropped by more than a third over the past three years. An analyst argued that the move to overhaul payphones would help improve Marconi's operations and could help the debt reduction program. NTL INCORPORATED: Bankers Shaken by Downgrade Rating ---------------------------------------------------- S&P's downgrade of Britain's top cable company NTL Incorporated has left its bankers shaken about their outstanding loans of $6 billion to the company, Reuters reported. S&P lowered NTL's long-term credit rating to B- from B+, and its bank debt to B from BB- last week, citing fears over the company's ability to service its $17.2 billion debt pile and its weak liquidity position. However, NTL's bankers are taking comfort from their senior secured lender status as they stand the best chance of getting their money back in the worst-case scenario. Cable companies like NTL have valuable assets to sell, including the broadcast mast division. NTL INCORPORATED: Disappointed With Market Reports -------------------------------------------------- Debt-laden NTL Incorporated said it was disappointed with the action taken by ratings agency Standard & Poor's and the published opinions of Goldman Sachs. Standard & Poor's recently changed NTL's outlook to negative from stable, and cut its long-term credit rating to B- from B+ and its bonds to CCC from B-. Rival Moody's downgraded NTL two weeks ago. In a meeting between Goldman Sachs and NTL investors, the U.S.- based investment bank said it expected NTL to swap bonds for shares in 2002. As a response to credit rating cuts and talk of a debt restructuring, NTL reiterated that it was fully able to meet its interest payments and trading obligations. The company last week said it would axe a further 2,000 jobs, implement a pay freeze for managers, review of all operating and capital expenses, and review and remove all non-essential consultants and contractors to improve efficiency. NTL also said it would sell its NTL Broadcast towers and transmission arm for more than one billion pounds. For more information, contact John F. Gregg, Senior Vice President - Chief Financial Officer, Bret Richter, Vice President - Corporate Finance and Development, or Tamar Gerber, Director- Investor Relations at telephone (+1) 212 906 8440, or via e-mail at investor_relations@ntli.com NTL INCORPORATED: May Cut Capital Spending to Survive ----------------------------------------------------- NTL Incorporated plans to revise down next year's revenue and expenditure figures in an attempt to convince analysts and bondholders that the cable company can still meet the earnings targets in its bank covenants. The covenants mean that NTL must keep within set ratios. For example, of debt to ebitda (earnings before interest, taxation, depreciation and amortization), or the banks can call in their debt. According to a report from the Financial Times, the most likely scenario will be a debt for equity swap, leaving the banks and bondholders in control of the company. Analysts at Bank of America Securities already value NTL's total equity at "zero" because of its high level of debt. RAGE SOFTWARE: Eidos Drags Down Rage Shares ------------------------------------------- Shares in British computer games publisher Rage Software Plc fell sharply by 11.4% in Thursday's trading after rival Eidos reported a sagging sales figure. According to a report from Reuters, shares in the David Beckham Soccer game maker closed at a two-month low of 7-3/4 pence on volume of 3.1 million. "The market is generally weak and Eidos didn't really help," one trader said. Rage's David Beckham Soccer has failed to dominate the charts, overshadowed by Electronic Arts Inc's Harry Potter game. Last week, the Beckham game dropped to 32nd place from 26th the previous week in the U.K. top 40 leisure software all-format charts as ranked by Charttrack. In the full-year to June 30, Rage Software's pretax loss more than doubled to 17 million pounds, compared with a 6.7 million pounds a year earlier. Like competitor Eidos, Rage has asked for fresh funds to reinforce its balance sheet. RAILTRACK GROUP: Prideaux Refuses Chairmanship Offer ---------------------------------------------------- Angel Trains director John Predeaux has turned down the chairmanship of Railtrack plc, the railway infrastructure business of Railtrack Group that went into administrator in October, after days of talks with administrator Ernst & Young, the Times newspaper reported. Sources said he feared he would not be allowed to make any real changes. Current Railtrack chief executive Steve Marshall will step down as soon as the appointments are made. Finance director David Harding and chairman John Robinson are also set to go. Lattice head Sir John Parker also shunned the Railtrack chairmanship in March. RAZORFISH INC.: Divests European Operations ------------------------------------------- Razorfish, Inc. has agreed to divest its European operations as part of its objective to return to profitability. "In making this difficult decision, we considered it was important for Razorfish to concentrate its energy and resources on growing its profitable operations located in the United States," Razorfish chief executive officer Jean-Philippe Maheu comments. The New York-based digital solutions provider has signed a series of purchase agreements for local management to acquire Razorfish's operations in Amsterdam, Hamburg, Frankfurt, Munich, Oslo, and Stockholm. While specific financial terms of the deals were not disclosed, Razorfish has agreed to sell the stock of the respective entities together with all related assets and liabilities. The company expects to complete the divestiture by December 31, 2001. As of September 30, Razorfish reported total current assets of $27.685 million, while total current liabilities at $31.094 million. The company also posted revenues of $19.023 million, net loss of $14.930 million and long-term debt of $14.233 million. *********** 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 * * *