/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/020118.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 Friday, January 18, 2002, Vol. 3, No. 13 Headlines * G E R M A N Y * ADAM OPEL: Operating Loss Widens to EUR674MM DEUTSCHE TELEKOM: Delays 2001 Results Report DEUTSCHE TELEKOM: Will Get DM1.4MM Tax Refund KIRCHGRUPPE: Liberty Drops Bid for KirchPay-TV Stake * I R E L A N D * AER LINGUS: Lays Off Pilots to Rescue Airline * N O R W A Y * KVAERNER ASA: Dorsey Advises Kvaerner on Rights Issue * P O L A N D * ELEKTRIM SA: Discards G8 Power Offer ELEKTRIM SA: Needs to Pay EUR480MM to Avert Bankruptcy * S W E D E N * LM ERICSSON: To Cut 1,000 R&D Jobs Worldwide * S W I T Z E R L A N D * SWISSAIR GROUP: Leaves Linklaters Out of Pocket SWISSAIR GROUP: Two Swiss Cantons Turn Down Swissair Bailout * U N I T E D K I N G D O M * COOKSON GROUP: Dresdner Cuts Cookson to 'Reduce' COOKSON GROUP: Hits Two-month Low CORUS GROUP: Will Rebuild Blast Furnace at Port Talbot ENODIS PLC: Debt-Cut Target Still in Place INVENSYS PLC: Tyco Warning Hits Invensys MARCONI PLC: Buys Back More Bonds to Reduce Debt MARKS & SPENCER: Christmas Figures Nets Boss GBP7MM Windfall MARKS & SPENCER: Ex-French Staff Members Approve Redundancy MARKS & SPENCER: Discussing Sale of Kings Super Markets MARKS & SPENCER: Will Return 2BB Pounds to Shareholders NTL INC: Sale of Credit Suisse Stake Key to NTL Survival Plan NTL INCORPORATED: Sets Out New Business Plan RAILTRACK GROUP: Byers Threatens to Halt Payments RAILTRACK GROUP: Convertible Bondholders Made Voting Mistake RAILTRACK GROUP: S&P Downgrades Rating to CreditWatch Negative ============= G E R M A N Y ============= ADAM OPEL: Operating Loss Widens to EUR674MM -------------------------------------------- The operating loss of embattled automobile manufacturer Adam Opel widened to 674 million euros ($595 million) in 2001, compared with 502 million euros in 2001. According to Frankurter Allgemeine's report, sales, administration and purchasing costs that have risen disproportionately have contributed to the recent slump in operating result. The company's difficult situation had forced Opel chairman Carl- Peter Forster to advance the timetable for the job cuts. Management had also started to discuss additional measures such as pay freezes and 30-hour work weeks without financial compensation. Opel chief of finance Walter Borst is confident that parent company General Motors will lend financial support if Opel requires more money. It was the American group that gave the blessing to Opel's restructuring program called Olympia, which should enable the automobile manufacturer to climb its way out of the red. DEUTSCHE TELEKOM: Delays 2001 Results Report -------------------------------------------- Deutsche Telekom AG will postpone reporting its 2001 results scheduled for January 29. The German telecom giant said earlier this month that it would stop reporting preliminary quarterly sales and earnings figures following confusion among analysts and investors about the figures. Analysts had complained that reporting a few headline figures before the availability of the complete results led to uncertainty and were difficult to compare with previous results, allowing the company to hide bad news. Deutsche Telekom will announce a new reporting date soon. DEUTSCHE TELEKOM: Will Get DM1.4MM Tax Refund --------------------------------------------- Fixed line operator Deutsche Telekom will receive a refund from the state of North Rhine Westphalia for corporation tax payments it made last year, the Telecom Paper reported. The tax refund has to be executed by the end of the year, and the payments exceed probably the amount the regional state actually received in corporation tax last year. DT can now claim back taxes it paid since the German finance ministry made it possible for large corporations to deduct from taxes an unlimited amount of losses stemming from units. Last year, Telekom sold its shares and asset-backed bonds as part of the company's plans to clean its balance sheet and bring down debt levels to US$49.9 billion by end of 2002. KIRCHGRUPPE: Liberty Drops Bid for KirchPay-TV Stake ---------------------------------------------------- U.S. cable group Liberty Media withdrew its application to the German Cartel Office for regulatory clearance to buy 22% of KirchPay-TV, a unit of the over-indebted Munich-based media group Kirch Gruppe. According to a Financial Times report, the move is the first sign that Liberty may be pacifying its uncompromising stance in talks with the competition watchdog on the separate 5.5-billion-euro ($4.9 billion) deal with Deutsche Telekom. Observers in Germany, however, doubt the group was ever interested in KirchPay-TV. A German media executive said "the Pay-TV filing was a deliberately aggressive move that was certain to antagonise the Cartel Office so that, by withdrawing it, Liberty would appear to be making concessions." Kirch has been under heavy pressure to solve its problematic debt situation. The company has debts of 11 to 12 billion Deutsche marks and more than contingent liabilities of 5 billion Deutsche marks. It aims to reduce the number of short-term loans and dispose of non-core assets, mainly minority holdings in non-German businesses, to improve its balance sheet. ============= I R E L A N D ============= AER LINGUS: Lays Off Pilots to Rescue Airline --------------------------------------------- Cash-strapped state airline Aer Lingus started laying off pilots on Wednesday as part of a rescue plan aimed at saving 190 million euros and returning the company to profitability. According to a Reuters report, Aer Lingus initially planned to make 80 pilots redundant, from a total of around 500. Aer Lingus earlier threatened compulsory redundancy for pilots who refuse to accept a voluntary package. This met angry resistance from Impact, the union representing the pilots, which has warned of possible strike action. The state airline plans to sell two Boeing 737 aircraft and auction off its corporate art collection to stay aloft. The Irish government is casting around for a buyer for up to 35% of Aer Lingus to fund the airline's rescue. Spanish carrier Iberia and British Airways, which partners with the Irish airline in the OneWorld alliance, were reported to have shown interest. =========== N O R W A Y =========== KVAERNER ASA: Dorsey Advises Kvaerner on Rights Issue ----------------------------------------------------- Dorsey & Whitney has advised Anglo-Norwegian engineering giant Kvaerner on its rights issue of the debt-restructuring program. According to a report from Legal Week, US partner Peter Kohl led the team, assisted by U.K. associates Julie Lasso and Frances Docherty. Kvaerner, which ran into financial difficulty last year, has negotiated a financial and industrial plan aimed at securing the company's future. Under the terms of the deal, the company has received approval for a directed offering in new equity through the issue of 250 million new shares. Kvaerner will also undergo a rights offering through the issue of 187.5 million new shares. Clifford Chance, led by partner Roderick McGillivray, acted for Kvaerner on banking issues, while Allen & Overy, led by partner Francis Bridgeman, acted for the group of banking creditors. =========== P O L A N D =========== ELEKTRIM SA: Discards G8 Power Offer ------------------------------------ Acting Elektrim President Waldemar Siwak said Wednesday that the Polish energy conglomerate has dropped out of a consortium bidding for a 25% stake in eight Polish regional power distributors, known as the G8 Group. During a hearing at a Warsaw district court on a petition filed by Elektrim convertible bondholders to declare the company bankrupt, Siwak said that Elektrim would no longer be part of the G8 bid. Siwak added that the company's energy subsidiary, El-Distribucja, may continue to participate in the privatization tender organized by Poland's treasury ministry. Elektrim is on the verge of bankruptcy after it convertible bonds debt defaulted December payments amounting to 480 million euros. ELEKTRIM SA: Needs to Pay EUR480MM to Avert Bankruptcy ------------------------------------------------------ Troubled Polish conglomerate Elektrim SA could still face bankruptcy unless it makes full and prompt repayment on 480 million euros in convertible bond redemptions it defaulted on in mid-December. Jarek Golacik of London-based Centaurus Capital, who is acting as spokesman for investors in the defaulted Elektrim convertible, told Dow Jones Newswires that bondholders are waiting for a sensible payment plan from Elektrim. Golacik added that the bondholders group, estimated to control at least 75% of Elektrim's convertible bonds, is ready to veto compensation talks unless the Polish conglomerate pays in full. Earlier, the Warsaw commercial tribunal rejected a bondholders' petition to declare Elektrim bankrupt. It instead ordered the company to seek a compromise settlement with its creditors. Elektrim acting CEO Waldemar Siwak said that the company was ready to offer better repayment terms. =========== S W E D E N =========== LM ERICSSON: To Cut 1,000 R&D Jobs Worldwide -------------------------------------------- Mobile phone manufacturer Ericsson, which posted a pre-tax loss of 5.8 billion Swedish kronas ($548.7 million) in the third quarter, will slash about 1,000 jobs in its research and development divisions globally in the next few months. According to a report from the Telecom Paper, a senior executive Ericsson said that around a few hundred in the mobile unit and a few hundred in the fixed-line R&D unit would likely be laid off to reduce costs. The redundancies will be on top of the already-announced staff reductions of 20% of the workforce unveiled last year. ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: Leaves Linklaters Out of Pocket ----------------------------------------------- Swissair, the collapsed Swiss aviation group, has left its legal adviser Linklaters with hundred thousand pounds of unpaid fees. A report from Legal Week did not disclose the exact amount Swissair owes. Linklaters was instructed along with KPMG in August 2001 to advise on Swissair's debt restructuring. However, the restructuring plan was aborted after the company suffered a further drop in the value of its business and assets. The firm's role subsequently ended after the company decided to follow a 'Swiss only' solution to save what assets remained by striking a deal with majority Swissair shareholder Crossair. SWISSAIR GROUP: Two Swiss Cantons Turn Down Swissair Bailout ------------------------------------------------------------ Although Zurich crucially voted to approve a 300 million Swiss francs contribution towards a new airline to replace Swissair, which filed for bankruptcy protection in October, two other cantons have rejected participation. According to a report from Tax-News, Bern refused to make a proposed 11-million-Swiss-franc investment in the new national carrier that is being created out of Swissair's former regional subsidiary company, Crossair. Solothurn also turned down a request for nearly 3 million Swiss francs. Bern said any participation in the project would be a negative signal at a time when the canton was trying to sort out its finances. In total, the new airline had written in backing of 400 million Swiss francs from the cantons, in addition to the 2.4 billion Swiss francs already raised by the government, banks and private business. Crossair said Bern's decision would not affect the Phoenix plan to take over 52 Swissair planes at the beginning of April. The federal government said it would have preferred all cantons to contribute. =========================== U N I T E D K I N G D O M =========================== COOKSON GROUP: Dresdner Cuts Cookson to 'Reduce' ------------------------------------------------ Cookson Group Plc was downgraded to "reduce" from "hold" by analyst Nick Wilson at Dresdner Kleinwort Wasserstein, Bloomberg reported. The move will definitely affect the value of the British electronics and ceramics firm. At the beginning of 2001, Cookson was worth nearly 1.3 billion pounds. It closed last week with a market capitalization of just 674 million pounds. In 1990 it was worth 250 million pounds. COOKSON GROUP: Hits Two-month Low --------------------------------- Shares in indebted electronics and ceramics firm Cookson Group Plc fell for the second day after American manufacturer Tyco International warned its quarterly earnings would miss analysts' forecasts, Reuters reported. Cookson's stock tumbled 13.7% to 72.5pence, a two-month low, having dropped sharply on Tuesday after it said sales in its struggling electronics division continued to be affected by the global slowdown. Cookson, which has issued a string of profit warnings in recent months, has been looking at ways to raise cash as it sets about tackling a large debt burden, which in December stood at around 800 million pounds. It has sold a plastics molding business this month for around 38 million pounds. CORUS GROUP: Will Rebuild Blast Furnace at Port Talbot ------------------------------------------------------ Anglo-Dutch steelmaker Corus Group, which has been selling as much as 287.5 million euros ($255.9 million) of convertible bonds to help repay its debt, will rebuild the blast furnace that was severely damaged in the tragic incident at its Port Talbot works in November last year. The cost is estimated at around 75 million pounds. The new furnace will have an iron output of some 1.5 million tons per year when it comes on-stream in January 2003. Together with its existing No. 4 blast furnace, Port Talbot will have an annual iron output of some 3.4 million tons. Meanwhile, investigations into the cause of the explosion at the blast furnace last year are still being conducted by South Wales Police in conjunction with the Health & Safety Executive. Corus employs some 8,000 people in Wales, of whom 3,000 are based at Port Talbot. ENODIS PLC: Debt-Cut Target Still in Place ------------------------------------------ Debt at the London-based commercial food service equipment manufacturer, Enodis, has increased again in spite of asset sales and job cuts. Enodis, which sells cookers to fast-food companies and display cabinets to supermarkets, is struggling to reduce net debt to 250 million pounds over the next two years. Debt stood at 366 million pounds at the end of September. According to a Financial Times report, Enodis chief executive Andrew Allner said that difficult market conditions, especially in the U.S., contributed to the increase. Allner plans to raise 50 million pounds from asset disposals this year, in addition to the Spanish subsidiary, Sammic, it sold in December for 20 million pounds. Further job cuts were also possible. Enodis already axed 900 jobs last year. The group reported a pre-tax loss of 109 million pounds in 2001, compared with a profit of 83.8 million pounds in 2000. INVENSYS PLC: Tyco Warning Hits Invensys ---------------------------------------- Invensys Plc, Britain's largest engineering company, lost as much as 6.8% to 113p after American rival Tyco International Ltd. said second-quarter earnings will be less than analysts' forecasts, Bloomberg reported. The London-based company, which last week sold its Brook Crompton unit and battery business, is trying to cut debt amid speculation by investors that it might breach agreements with lenders. The group was battered last year by a series of profits warnings and 3.3 billion pounds of debt as of September 30. Invensys operates in all regions of the world through the Software Systems, Automation Systems, Power Systems and Control Systems divisions. With close to 76,000 employees, the group supplies products and services ranging from advanced control systems, remote diagnostics and energy management for process plants, factories and commercial environments to electronic devices and networks for residential buildings, as well as complete power systems for the industrial, telecommunications and information technology sectors. MARCONI PLC: Buys Back More Bonds to Reduce Debt ------------------------------------------------ Troubled British telecom equipment maker Marconi Plc said Thursday it has spent about 110 million pounds ($158 million) to buy back bonds issued by it worth 200 million pounds nominal to help reduce debt. The company bought 24.9 million euros ($22 million) of its 500 million-euro bonds maturing in 2005, 60 million euros of its 1 billion-euro bonds maturing in 2010, $86 million of its $900 million bonds maturing 2010 and $130.1 million of its $900 million bond maturing in 2030. The company paid an average of 55% of the bonds' face value. Last month, Marconi said it bought back about $219 million of its bonds, paying about 52% of the bonds' face value. MARKS & SPENCER: Christmas Figures Nets Boss GBP7MM Windfall ------------------------------------------------------------ Marks & Spencer chairman Luc Vandevelde has options worth nearly 7 million pounds following a turnaround in the retail chain, the British daily The Guardian reports. Nearly two years ago, Vandevelde was offered 808,080 shares upon assuming his position. The shares are now worth 2.9 million pounds. He was also awarded options over nearly 4 million shares, which he can buy for 261p. A positive outlook at the store prompted the shares to rise to 359p, and they are now worth 3.9 million pounds, although the chairman can cash them in only until next March, the paper's sources say. A year ago, when there was no sign of recovery at the group and sales were still sliding, Vandevelde was forced to defer an annual bonus of 704,000 pounds. He will receive that bonus, in cash and shares, this year. Vandevelde is likely to receive another bonus of 60% of his 650,000-pound annual salary, and an additional 975,000 pounds worth of share options. M&S, which is cutting back its loss-making operations in Britain and Europe, is expected to pay back 2 billion pounds of capital to shareholders by March from money raised through disposals and property deals. MARKS & SPENCER: Ex-French Staff Members Approve Redundancy ----------------------------------------------------------- Louis Hill, spokesman for retail operator Marks and Spencer PLC, said Wednesday that about 85% of its 1,500 former employees of its French subsidiary have decided to accept redundancy packages rather than take the new jobs at Galeries Lafayette SA. When M&S exited its presence in continental Europe, Galeries Lafayette took over 18 of former M&S stores last year, in association with a group of other retailers. Hill added that the 224 million pounds the company had originally set to cover the cost for its European pullout was still sufficient. A Galeries Lafayette spokeswoman disclosed that final figures regarding the company's redundancy plan approval by ex-employees will be confirmed by the end of January. MARKS & SPENCER: Discussing Sale of Kings Super Markets ------------------------------------------------------- High street retailer Marks & Spencer hopes to sell its Kings Super Markets subsidiary in the U.S. in the next two weeks. According to a report from The Times newspaper, Marks & Spencer chief executive and chairman Luc Vandevelde is negotiating with three potential buyers for the business. Vandevelde insisted that the sale of Kings will have no influence on M&S' ability to fulfill its promise of returning 2 billion pounds to shareholders in March. He said the company has already secured the funds for it. MARKS & SPENCER: Will Return 2BB Pounds to Shareholders ------------------------------------------------------- Marks & Spencer has confirmed plans to return 2 billion pounds to shareholders prompted by strong Christmas trading. According to Ananova's report, the clothing retailer plans to payback its shareholders on a pro rata basis starting March as sales rose by 8.9% over the seven weeks to January 12. M&S says womenswear performed particularly strongly. Its food sales growth of 5.2% also beat last year's 4.2% figures. NTL INC: Sale of Credit Suisse Stake Key to NTL Survival Plan ------------------------------------------------------------- Investment bank Credit Suisse First Boston intends to sell its stake in NTL as part of its proposal to stave off bankruptcy at the debt-laden cable company. Credit Suisse is on the verge of being hired to organize a fund raising for additional capital. Selling a stake remains one of the bank's options, but it has to be approved by shareholders and bondholders. Potential investors are believed to be U.S. media group Liberty Media and AOL Time Warner. NTL chief executive Barclay Knapp remains confident that the cable group can still avoid bankruptcy and attract potential investors with the group's strong cash flow and large subscriber base. He hopes to restructure the company's balance sheet without having to seek protection under Chapter 11 in the U.S. or receivership in the U.K. NTL INCORPORATED: Sets Out New Business Plan -------------------------------------------- Cable operator NTL met with its bankers Thursday to set out the impact of a revamped 2002 business plan and anticipated bond restructuring on its $6 billion (4.18 billion pounds) outstanding loans, Reuters reported. NTL's new business plans outlines the details with its creditors about outstanding loans before it makes payments of eurobond coupons in February. NTL has two secured loans outstanding. A 2.5 billion pound loan signed in September 2000 financed its $13 billion merger with Cable & Wireless Communications (CWC). Another 4.1 billion Swiss francs (1.67 billion pounds) facility was secured in March 2000 backed NTL's purchase of Switzerland's Cablecom. CWC loan lenders are agreeable to a revised business plan. They have the first claim to the proceeds of a possible asset-sale, as the 2.5 billion pound CWC loan contains a mandatory prepayment clause. NTL is struggling to manage $17 billion of debt after credit downgrades and delayed asset sales. The company is now worth about $130 million, compared with about $11 billion last year before it ran into financial problems. RAILTRACK GROUP: Byers Threatens to Halt Payments ------------------------------------------------- The government has warned holders of Railtrack plc's 400-million- pound convertible bond that it could suspend interest payments on the debt after they decided not to enter its standstill agreement, designed to protect financial creditors. According to a report from the Daily Telegraph, the department of Transport Secretary Stephen Byers said that the government was minded to halt payments from next week. Holders of the bond seemed split on what action to take. All the other bondholders and other financial creditors have signed up to the standstill. Under this arrangement, Byers promised to continue their interest payments and repay the debt when it matures. RAILTRACK GROUP: Convertible Bondholders Made Voting Mistake ------------------------------------------------------------ Some of Railtrack Plc's exchangeable bondholders, who failed to agree on waiving their right to call the company debt, actually meant to pass it but voted incorrectly, Reuters reported Wednesday, citing unnamed sources. Sources said it was likely that one or two large holders of Railtrack's 400 million pound 3.5% 2009 bond had mistakenly voted against signing up to a standstill agreement at the Tuesday meeting. The report did not say who the bondholder was. Bondholders of Railtrack's five fixed-rate bonds all agreed to the standstill agreement and will continue receiving payment of interest on their bonds from the government, which placed the network operator in administration in October. "It looks like someone filled out their voting forms incorrectly. One or two reasonable sized holders didn't vote in favor of the standstill agreement and, from what we can make out, that was a mistake," the source said. RAILTRACK GROUP: S&P Downgrades Rating to CreditWatch Negative -------------------------------------------------------------- Credit ratings agency Standard & Poor's has revised Wednesday Railtrack's CreditWatch implications on the convertible bond's BBB+ rating to negative from developing. Apart from the A-1+ commercial paper rating, all other ratings on Railtrack, including the BB+/B corporate credit ratings, remain on CreditWatch with developing implications. The move comes after the holders of Railtrack PLC's 400-million- pound 3.5% exchangeable bonds failed to agree to give the government breathing space to find a buyer or set up a not-for- profit replacement for the insolvent railway operator. As a result of their rejection of the standstill arrangements, the exchangeable bondholders will no longer benefit from the load that was provided by the U.K. government to the Railway Administrators. Standard & Poor's said it would continue to monitor the position in relation to both the exchangeable bonds and the other ratings on Railtrack. *********** 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 2002. 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 * * *