/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/011218.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 Tuesday, December 18, 2001, Vol. 2, No. 246 Headlines * F R A N C E * VALEO SA: U.S. Subsidiary Files for Reorganization * G E R M A N Y * LOBSTER NETWORK: Files for Bankruptcy Protection MOENUS GROUP: Opens Insolvency Proceedings PHILIPP HOLZMANN: Earnings Remain Under Pressure SAARSTAHL AG: Saved From Insolvency * I R E L A N D * AER LINGUS: Unions Threaten to Stage Strike WEXFORD ELECTRONIX: Goes Into Receivership * I T A L Y * FIAT SPA: To Reschedule Debts in Overhaul * S P A I N * SINTEL: Government Grants Early Retirement Scheme * S W I T Z E R L A N D * PSINET INC: Brits Commend PSI Services SWISSAIR GROUP: France Seizes Swissair Jet * U N I T E D K I N G D O M * BIOGLAN PHARMA: Banks Extend Debt Standstill CONSIGNIA: Blair Ready to Break up Post Office CONSIGNIA: Chief Roberts Retracts Layoff Talks CONSIGNIA: Job Cuts Criticized ENRON CORPORATION: Schroder SSB Seeks Wessex Water Buyer ENRON CORPORATION: Wessex Water Bidders Face Regulator Hurdles EQUITABLE LIFE: May Reduce Exit Penalty to 5% EXCHANGE DIRECT: Investigators Discover Hole at Currency Firm MARCONI PLC: Declines Comment on 1-BB-Pound Rights Issue MARKS & SPENCER: Pulls Out of Spain NTL INCORPORATED: Mum on Failed Tower Sale NTL INCORPORATED: Filing for Bankruptcy to Conserve Cash P&O PRINCESS: Shuns Counter Bid From Carnival RAILTRACK GROUP: Bondholders Approve Debt Standstill RALITRACK GROUP: Government Offers Payoff for Shareholders RAILTRACK GROUP: Profit Increase Strengthens Legal Position =========== F R A N C E =========== VALEO SA: U.S. Subsidiary Files for Reorganization -------------------------------------------------- Valeo's North American subsidiary Valeo Electrical Systems, Inc. (VESI) has filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code to protect its operations and provide a framework for restructuring. The move came as VESI anticipated an operating loss of $70 million in 2001. Europe's largest publicly traded car parts maker said that the Chapter 11 filing is limited to VESI manufacturing facility in Rochester, New York and its associated sales and administrative offices in New York City and Auburn Hills, Michigan. The filing does not involve any other Valeo company in the U.S. or elsewhere. Under the protection of Chapter 11, VESI will continue to operate and serve the needs of its customers, meet employee payrolls, and establish priority of payment to suppliers for materials delivered and services rendered following the filing of the petitions. Detailed information about the VESI Chapter 11 filing can be found at http://www.bankrupt.com/misc/valeo11.pdf For more information, contact Kate Philipps at telephone +33 1 40 55 20 65 or via email at kate.philipps@valeo.com ============= G E R M A N Y ============= LOBSTER NETWORK: Files for Bankruptcy Protection ------------------------------------------------ Lobster Network Storage AG, a vendor independent provider of enterprise solutions in data storage and backup, filed for bankruptcy protection yesterday in order to protect the interests of creditors, shareholders and employees of the company. Early this month, the Berlin-based company pointed out that a capital increase necessary for continuation of operations would not work out as planned until end of December. Lobster Network added it still has sufficient cash to remain able to act during the preliminary insolvency procedure. It intends to proceed the talks with potential investors and to bring them to a successful end. Further information, contact Kira Baitalskaia at Zimmerstrasse 68, 10117 Berlin, telephone 030.896.72-0, fax 030.896.72-499, or via email info@lobster.de MOENUS GROUP: Opens Insolvency Proceedings ------------------------------------------ Insolvency proceedings were opened against some companies within the Moenus textile machinery group, Suddeutsche Zeitung reported. Affected are Moenus Textilmaschinen AG, Sucker-Muller-Hacoba GmbH and BTM Textilmaschinen GmbH. The main rescue measures will be carried out soon. The number of job cuts planned in the group, which counts around 900 employees, is not yet known. The Moenus group showed an average turnover of 300 million Deutshce marks over the past three years. PHILIPP HOLZMANN: Earnings Remain Under Pressure ------------------------------------------------ Equity of German construction group Philipp Holzmann, which narrowly escaped bankruptcy two years ago, has shrunk this year alarmingly, the Suddeutsche Zeitung reported. Head of finance Johannes Ohlinger reckons with a group loss of around 70 million euros for 2001. This would have the effect of reducing Holzmann's equity to 100 million euros. Ohlinger said that there was no immediate solution for the equity problem but stressed that the group was not facing a liquidity squeeze. The level of bank debt will be reduced by 500 million euros to 1.6 billion this year. In September, Philipp Holzmann posted a net loss of 56.52 million euros (see http://bankrupt.com/misc/philipholzmann1.pdffor the company's financial statement). SAARSTAHL AG: Saved From Insolvency ----------------------------------- German steel company Saarstahl AG is no longer insolvent after insolvency proceedings were lifted on December 11, reports Suddeutsche Zeitung. Meanwhile, shareholders have unanimously decided in favor of the continuation of the business. The decision by the supervisory board to invest 150 deutsche marks in a new continuous casting plant is seen by administrator Hans Ringwald, who will join the supervisory board, as an indication of a definite strategy that will also include acquisitions. Turnover this year is expected to show a slip of between 10 and 15%, Suddeutsche Zeitung added. ============= I R E L A N D ============= AER LINGUS: Unions Threaten to Stage Strike ------------------------------------------- IMPACT assistant general secretary Michael Landers said that the union would hold a strike ballot if Aer Lingus attempted to introduce compulsory redundancies, Irish Times newspaper reported. Landers added that the pilots were offered less favorable terms of 50,000 pounds, compared with 180,000 pounds to the other staff. Meanwhile, chief executive Willie Walsh said that fewer than five pilots have so far applied to the company's scheme, compared with more than 1,600 other staff who have opted for early retirement or voluntary severance. If more volunteers do not come forward to avail of the company's early retirement scheme, pilots of Ireland's national carrier will face compulsory redundancies in January. WEXFORD ELECTRONIX: Goes Into Receivership ------------------------------------------ Several hundred jobs were threatened in Wexford when Wexford Electronix, which manufactures cable harnesses for the motor industry, went into receivership. According to a report from the Irish Times, Electronix requested its banks to appoint a receiver because of a sharp drop in sales demand, particularly in the past three months. Receiver Ray Jackson of KPMG will spend the next few days examining the company's accounts to determine if it can continue to trade in the short term. "We will be advertising the business for sale as a going concern," Jackson said. He added that the company has not yet received notice from potential buyers. ========= I T A L Y ========= FIAT SPA: To Reschedule Debts in Overhaul ----------------------------------------- Italian carmaker Fiat is rescheduling its 7.5-billion-euro debts as part of a wide-ranging overhaul, the Financial Times reports. The overhaul includes a 1-billion-euro rights issue, closures or cutbacks at 18 plants, 2-billion-euro of disposals and a $2.2 billion convertible bond issue. A large part of Fiat's borrowings is due for repayment soon. It will now be rescheduled until 2005 as part of a five-year bond, tied to Fiat's 5.7% stake in General Motors. This year, the company's cashflow deteriorated sharply mainly due to worsening conditions in Argentina, Brazil and Poland. ========= S P A I N ========= SINTEL: Government Grants Early Retirement Scheme ------------------------------------------------- The Spanish labor and social affairs ministry has acceded to the early retirement scheme of cash-strapped telecommunications solutions provider Sintel, the Spanish newspaper Expansion reported. Earlier, the CCOO and UGT unions have requested the government to grant the extraordinary aid. ===================== S W I T Z E R L A N D ===================== PSINET INC: Brits Commend PSI Services -------------------------------------- Geneva-based PSINet Europe BV, one of the world's largest and most experienced providers of IP based communications services for business, said that 80% of PSI customers in the U.K. were very happy to recommend the company's hosting and access solutions. The result, based on a customer care program undertaken by Telecom Experience, was derived from 1,527 telephone interviews conducted from October to November. PSINet has enhanced its services by centralizing functions including the provision of a European wide technical support center in La Chaux de Fonds, Switzerland providing a single point of contact around-the-clock in English, French, German and Italian. PSINet Europe, an independent subsidiary of PSINet Inc., is a leading provider of Internet and IT solutions offering hosting solutions, global eCommerce infrastructure, end-to-end IT solutions and a full suite of retail and wholesale Internet services. SWISSAIR GROUP: France Seizes Swissair Jet ------------------------------------------ The French authorities have confiscated a Crossair AG jetliner at the Nice airport on behalf of Air Lib, Dow Jones Newswires reported. Air Lib claims Swissair Group AG, wich filed for protection from creditors, owes it 60.98 million euros. Air Lib changed its name from AOM-Air Liberte in September after French holding company Holco won the right to try to rescue the airline that posted a net loss of 2.4 billion francs last year. Its former co-owners, Swissair Group and French investment group Marine Wendel, refused to inject more money into the French carrier, leading it to file for bankruptcy in June. Swissair is the former parent of Crossair. =========================== U N I T E D K I N G D O M =========================== BIOGLAN PHARMA: Banks Extend Debt Standstill -------------------------------------------- The banks of debt-laden biotech firm Bioglan Pharma Plc, located at Hertfordshire, north of London, have agreed to extend a loan repayment freeze to December 21 while the firm continued to look for a buyer for all or part of its operations, Reuters reported. "Although there can be no assurances that these financing arrangements will be extended beyond December 21, Bioglan remains in active discussion with its banks with a view to achieving a longer term solution for the company," the company said in a statement. Bioglan is in talks with an unnamed U.S. pharmaceutical firm, likely to lead to a rescue deal by Christmas, the news agency added. As of July, Bioglan's net debt stood at 105 million pounds, while operating loss was at 34 million pounds. The company further revealed current assets of 42.9 million pounds and current liabilities of 57.4 million pounds. CONSIGNIA: Blair Ready to Break up Post Office ---------------------------------------------- Tony Blair has privately agreed that state-owned post office group Consignia will have to be broken up if it is to have a long-term future. The Sunday Times newspaper reported that the British Prime Minister has supported a far-reaching proposal that would lead to Consignia split into two companies. This would involve Royal Mail and ParcelForce put into one company. The other would be the government-subsidized Post Office Counters. Chief executive John Roberts told the government that up to 15% of the cost base, equal to 1.2 billion pounds, has to be taken out in the company saddled with heavy fixed costs. CONSIGNIA: Chief Roberts Retracts Layoff Talks ---------------------------------------------- The threat of a national postal strike was lifted yesterday after Consignia chief executive John Roberts withdrew his threat of 30,000 job losses, the Guardian newspaper reported. Roberts claimed he had given only "speculative arithmetical answers" to MPs during a select committee hearing on Tuesday and the total had never been intended as a firm figure. Consignia said in its two-page joint agreement with Communication Workers Union (CWU) that it would take "no steps" towards compulsory redundancies. "We are delighted that we have reached agreement so our members know that no-one can put them out of a job," CWU deputy general secretary John Keggie said. "Any job losses will be dealt with through collective bargaining and on a voluntary basis." Consignia recorded a loss of 281 million pounds in the first six months of this year, blaming the abrupt turnabout on increased competition driven by European Union regulations. CONSIGNIA: Job Cuts Criticized ------------------------------ Retail consultancy Verdict criticized state-owned post office group Consignia for cutting jobs as the market for home deliveries is set to increase rapidly over the next five years, the Financial Times reported. According to the Verdict report the value of goods being delivered to shoppers' homes will rise from 28.3 billion pounds this year to 42 billion pounds by 2006. Last week, Consignia sparked a wave of protests when it announced plans to axe 30,000 jobs through voluntary redundancies to meet cost-saving targets of 1.2 billion by 2003. The Communications Workers' Union has threatened to call a strike ballot unless the financially troubled post office group withdrew its statement. ENRON CORPORATION: Schroder SSB Seeks Wessex Water Buyer -------------------------------------------------------- Investment bank Schroder Salomon Smith Barney was appointed to find a buyer for Wessex Water, the regional UK utility owned by bankrupt U.S. energy trader Enron Corp. According to a report from Reuters, Enron is prepared to accept a bid as low as one billion pounds ($1.45 billion), but added that there was little chance of a deal before the end of this year. SSSB declined to confirm or deny its appointment. ENRON CORPORATION: Wessex Water Bidders Face Regulator Hurdles -------------------------------------------------------------- Wessex Water bidders West LB and Royal Bank of Scotland face serious regulatory hurdles, the Sunday Times reports. Existing rules forbid companies with a controlling interest in one U.K. water business from owning another without a reference to the Competition Commission. West LB holds a debt and equity stake in Mid-Kent Water, while Royal Bank of Scotland is about to complete a deal that will give it a stake in South Downs Water. First-round bids for Wessex Water will close on January 13. EQUITABLE LIFE: May Reduce Exit Penalty to 5% --------------------------------------------- Civil servants from the Cabinet Office and the Department of Health are believed to have persuaded Equitable Life to reduce the exit penalty to just 5% for those who have a top-up pension, the Times newspaper reported. Their Equitable pensions have an estimated value of more than 100 million pounds. If the deal will be finalized, it will enable 40,000 public sector workers to withdraw their pensions from troubled mutual life assurer at minimal cost. The deal will also anger Equitable's 485,000 individual with- profits policyholders who must still pay a penalty of 10% to leave early. Equitable's individual policyholders and 6,000 pension group trustees will decide by January 11 on the compromise scheme that will allow the assurer to cap its liabilities to holders of valuable guaranteed annuity rate policies (GARs), estimated at about 1.6 billion pounds. EXCHANGE DIRECT: Investigators Discover Hole at Currency Firm ------------------------------------------------------------- Scotland Yard investigators have discovered that Exchange Direct, formerly one of the UK's top currency-exchange firms until it became insolvent last week, has missing funds of 15 million pounds, the Sunday Times reported. Exchange Direct's provisional liquidator Kroll Buchler Phillips said it would take some time before a full audit of the company is completed. Exchange Direct traded money for companies and individuals at rates cheaper than those offered by most banks. Its sales reached 5.2 million pounds last year. MARCONI PLC: Declines Comment on 1-BB-Pound Rights Issue -------------------------------------------------------- Marconi spokesman Joe Kelly has declined to comment on a newspaper reports that the embattled telecoms equipment maker equipment maker plans to launch a rights issue of up to 1 billion pounds, Reuters reported. The Independent on Sunday, quoting a source close to the company, said Marconi was looking at a rights issue as one option to bring down its 4.3 billion pound debt burden. The Daily Telegraph also said that Marconi is expected to wait until the share price reaches 100p and economic circumstances improve. Kelly said Marconi's net debt was around 3.5 billion pounds and that the company was looking to bring it down to between 2.7 billion and 3.2 billion by March 2002. MARKS & SPENCER: Pulls Out of Spain ----------------------------------- High-street retailer Marks & Spencer, which is cutting back its loss-making operations in Britain and Europe, has pulled out of Madrid. According to a Reuters report, security guard at the Spanish store turned away shoppers on Saturday hoping for last minute pre-Christmas bargains after it shut early on its final day. Freezing temperatures meant not many people lingered outside but some of those who did seemed less than impressed by the shop's clothing range and prices. Last month, M&S said it would sell its nine Spanish stores to the country's biggest retailer, the privately owned El Corte Ingles. M&S hopes to return 2 billion pounds to shareholders in March from money raised through disposals and property deals. NTL INCORPORATED: Mum on Failed Tower Sale ------------------------------------------ Debt-laden cable operator NTL Incorporated has declined to comment on press reports that the company's tower sale has failed, Reuters reported. The Sunday Business newspaper said that plans to sell NTL's broadcast mast network have fallen through while the Independent on Sunday newspaper said the cable company was at risk of breaching covenants on a 2.5 billion pound loan by the end of this year. The Observer newspaper added that NTL would be taken over by its banks in the New Year, paving the way for a merger with rival Telewest. An NTL spokeswoman dismissed the reports as speculation as the Sunday press did not mention any NTL source. The spokeswoman added that the company remained fully funded and was not in breach of any banking covenants. The company last week said it would further cut 2,000 jobs, implement a pay freeze for managers, review all operating and capital costs. It also reiterated that it was fully able to meet all its trading operations and interest payments. It also said it would sell its NTL Broadcast towers and transmission arm for about 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: Filing for Bankruptcy to Conserve Cash -------------------------------------------------------- Investors are saying that NTL Inc. shall seek Chapter 11 bankruptcy protection to save cash and continue operations while renegotiating its debt of $17.5 billion, Bloomberg reports. "It has run out of choices and it's now recognized as being a very serious situation," Christine Johnson of Investec Asset Management Ltd comments. NTL is struggling to increase revenue and sell assets after spending more than $19 billion in two years to buy 11 rivals. The stock has fallen 76% since November, when Moody's Investors Service cut the rating on NTL's junk bonds to just four notches above default. Standard & Poor's last week also cut its rating. The shares fell 10%, or 8 cents, to 71 cents on Friday, valuing NTL at less than $200 million, compared with a high of more than $30 billion in January of last year. P&O PRINCESS: Shuns Counter Bid From Carnival --------------------------------------------- London-based cruises operator P&O Princess Cruises rejected a counter-bid of 3.1 billion pounds from Carnival Corp, Reuters reported Monday. P&O Princess said Royal Caribbean's bid was more attractive than the Carnival proposal as it offered greater value to shareholders and faced less regulatory risk in the United States and Europe. Carnival's offer valued each P&O share at 450p and the entire share capital of P&O Princess at 3.1 billion pounds. The offer consisted of 200 pence in cash and 0.1361 Carnival shares for each P&O Princess share. P&O Princess expects its unusually structured deal with Royal Caribbean Cruises Ltd. to close before the middle of 2002, if approved by shareholders and regulators in Europe and the United States. In November, P&O Princess received a downgrade review from Moody's Investors Service. Its Baa1 rating for senior unsecured debt was cut to Baa3 on expectation of higher combined debt levels following the company's merger announcement with Royal Caribbean. RAILTRACK GROUP: Bondholders Approve Debt Standstill ---------------------------------------------------- Railtrack holders of nearly 1.14 billion pounds of its 1.5 billion pounds in bonds have agreed not to call in the debts or take legal action against the insolvent railway operator to recover their money, Reuters reported. The standstill agreement is the first stage in the government's plans to transfer the debts to a successor firm, which the government envisages as a not-for-profit firm funded entirely by debt. Under terms of the deal, bondholders waive their rights to all claims of default. In return, the government will service Railtrack's debt for three years or until its liabilities are transferred to a replacement company. Meetings of holders of Railtrack's 100-million-pound 9.625% 2016 bond and its 300-million-pound 7.375% sterling bond due 2022 were adjourned until January 15. Holders of a 400-million-pound equity-linked bond due 2009 will also meet again on January 15 to vote on a deal. RALITRACK GROUP: Government Offers Payoff for Shareholders ---------------------------------------------------------- Ministers are studying a scheme under which the disgruntled shareholders of Railtrack will swap their equity in the collapsed rail network for debt in the new infrastructure company. According to a report from The Sunday Times, the offer will be included in the government-backed bid for Railtrack's assets. Shareholders will be asked to accept loan stock in return for their shares. A compromise would also allow the government to rebuild its relationship with the City. In return for a government pledge to guarantee to service the bonds for another three years or until Railtrack is taken over, holders of the 1.1-billion-pound worth of bonds agreed not to call in their loans or take legal action. Simon Haslam, leader of the Railtrack Shareholders' Action Group, said that shareholders would be likely to accept the government offer. The government's bid will likely face competition from German bank West LB, which plans to buy out Railtrack shareholders. RAILTRACK GROUP: Profit Increase Strengthens Legal Position ----------------------------------------------------------- It is understood that profits at Railtrack Group, which includes the Railtrack plc business currently in administration, were up substantially in the half-year to September 30, compared with the reported 175 million pounds in the same period last year. According to a report from the Scotsman newspaper, the figure could be as much as 300 million pounds before tax in the half year. The results seem to strengthen the argument of the company and shareholders that Transport Secretary Stephen Byers was wrong to push Railtrack into administration in October. The Railtrack Shareholders Action Group is preparing for legal action against the government. *********** 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. 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