/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/020214.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 Thursday, February 14, 2002, Vol. 3, No. 32 Headlines * F I N L A N D * SONERA CORP.: Russian Affiliate Rakes in US$138 MM Loan * G E R M A N Y * BIODATA INFORMATION: Administrator Disposes Two Businesses DEUTSCHE TELEKOM: Liberty Gives up Hope to Get Clearance INTERSHOP COMMUNICATIONS: Cuts Net Loss by EUR7.4MM INTERSHOP COMMUNICATIONS: Reduces 30% of Workforce KIRCHGRUPPE: Deutsche Bank's Breuer Heads Crisis Talks KIRCHGRUPPE: Exec Admits Liquidity Woes, But Group Won't Fold * H U N G A R Y * MOL RT: Sale of Gas Operations Impossible Before Elections * I T A L Y * BLU SPA: Sets Shareholder's Meeting to March 5 FIAT SPA: Joint Venture Unit Gets EUR200MM Order From Spain * L U X E M B O U R G * CARRIER1 INTERNATIONAL: Files for Bankruptcy Protection CARRIER1: S&P Cuts Long-term Credit Rating to D * N O R W A Y * KVAERNER ASA: Norway Approves Kvaerner-Aker Maritime Merger * S W E D E N * LM ERICSSON: To Cut up to 300 Jobs in Norway * U N I T E D K I N G D O M * BRITISH AIRWAYS: Will Cut up to 7,000 Jobs to Stem Losses CONSIGNIA: Lay-off May Result in Pension Fund Shortfall ENRON CORPORATION: Lord Wakeham Resigns From Board EQUITABLE LIFE: Faces Action From Policyholders JAZZTEL PLC: Moody's Cuts Ratings to Caa3 RAILTRACK GROUP: EC Approves Government Aid RAILTRACK GROUP: Three Directors Leave Board TOTALISE PLC: Court Appoints Administrators ============= F I N L A N D ============= SONERA CORP.: Russian Affiliate Rakes in US$138 MM Loan ------------------------------------------------------ Sonera Corporation's Russian affiliate Sonic Duo has been granted US$138 million in loans and funding by the European Bank for Reconstruction and Development, International Finance Corp (IFC), HypoVereinsbank and Nordea PLC. Sonic Duo, which is a GSM service provider operating under the MegaFon brand, will use the financial facility to further develop its GSM network. The four financial institutions expect that Sonic Duo will receive debts in excess of US$250 million in the next 4 to 5 years. Aside from the said facility, local banks are expected to make further investments. MegaFon is owned by Sonera (26%), Telecominvest (31%), Central Telegraph Mobile (26%), Telia (8%), IPO Growth Fund (6%), Zao WestLink (1.5%) and ZAO Kontakt S (1.5%). Sonera, the Helsinki-based mobile communications company that has amassed debt of 3.3 billion euros, has so far invested a total of about US$50 million in Sonic Duo. ============= G E R M A N Y ============= BIODATA INFORMATION: Administrator Disposes Two Businesses ---------------------------------------------------------- The insolvency administration of Biodata Information Technology AG, the Lichtenfels-based developer and producer of electronic security applications for communication and computer networks, has given its Babylon encryption platform and the firewall technology shielding against hacker attacks to the newly founded BS Systems GmbH located in Frankenberg, Germany. No financial details were disclosed. Dica Technologies GmbH, a 100% subsidiary of Biodata IT AG with its main office in Dresden, continues the operative business of the BlueCrypt encryption line. The management team consists of the former head of the Dresden branch, Dr. Norbert Wulst, plus the business consultant and former managing director of a commodities trading company, Dr. Jochen Brinkmann. BS Systems GmbH located in Frankenberg purchased the rights of the Babylon and BIGfire products. The new company has almost 50 employees, led by renowned entrepreneur Claus Platen. Biodata Information, which reported a consolidated loss of 70 million euros ($60.15 million) in the third quarter of 2001, filed for insolvency at the local court in Korbach in November 20 after talks with potential investors failed. The regular insolvency proceedings of Biodata Information commenced on February 1, with Dr. Westhelle as insolvency administrator. Contact Heiko Scholz of Biodata Information Technology AG through mail at Burg Lichtenfels, 35104 Lichtenfels, or telephone at +49 (0) 6454 / 9120-118, fax at +49 (0) 6454 / 9120-180, or via e- mail at heiko.scholz@biodata.com for further information. DEUTSCHE TELEKOM: Liberty Gives up Hope to Get Clearance -------------------------------------------------------- John Malone of the U.S. media group Liberty Media has given up on hopes of receiving regulatory clearance for its proposed 5.5 billion euros ($4.8 billion) offer for the 60% of Deutsche Telekom's cable-TV network, the Financial Times reported. Liberty is expected to make its final submission by the end of this week to the German cartel office. The cartel office has raised concerns that the purchase of cable assets from the Bonn-based telecom giant, which aims to cut its debt of 65 billion euros ($55.8 billion) to 50 billion ($42.9 billion) euros by the end of this year, would make Liberty the largest cable operator in Germany. Early this month, Germany's Federal Cartel Office warned that it would only approve the offer if the U.S. company agrees to create greater competition in affiliated markets, such as Internet or telephony, by developing its network. INTERSHOP COMMUNICATIONS: Cuts Net Loss by EUR7.4MM --------------------------------------------------- Intershop Communications AG, a leading provider of ebusiness software applications, reported Tuesday a net loss of 24.7 million euros for the fourth quarter of 2001, compared to a net loss of 32.1 million euros in the fourth quarter of 2000. Fourth quarter revenue totaled 11.7 million euros, compared with revenue of 14.7 million euros in the third quarter of 2001, ended September 30, 2001. Continued cost reduction measures progressively reduced Intershop's quarterly cash and marketable securities usage to 8.9 million euros in the fourth quarter of 2001, compared to 10.4 million euros in the third quarter of 2001. Intershop ended fiscal year 2001 with total liquidity including cash, cash equivalents, marketable securities, and restricted cash at 36.3 million euros, compared with 45.2 million euros as of September 30, 2001. INTERSHOP COMMUNICATIONS: Reduces 30% of Workforce -------------------------------------------------- In order to dramatically accelerate Intershop's path to profitability, CEO Stephan Schambach has launched a series of strategic initiatives. The e-commerce software producer will cut its global workforce from the current 733 employees to 500 by the end of the second quarter of 2002 as a result of completely redesigning and simplifying the organizational structure. Only a year ago, the company still had more than 1,000 employees. To cut costs, Intershop reorganized distribution. After jobs in the United States were already cut to 56 from 250 staff, the software producer also reduced staff numbers in Asia to 12. Furthermore, the CEO appoints a new management team to be based in the company's headquarters in Jena, Germany. Intershop will also target global enterprise customers, up-sell the new MultiSite and Content Management product offerings within the installed customer base, intensify indirect selling, and focus more intensely on the Retail and High-Tech & Manufacturing industries. Intershop's stock dropped almost 90% last year due to numerous profit warnings caused by a dramatic decline in information technology spending. For information, contact Klaus F. Gruendel, Investor Relations, at telephone +49-40-23709-128, fax +49-40-23709-111 or e-mail k.gruendel@intershop.com KIRCHGRUPPE: Deutsche Bank's Breuer Heads Crisis Talks ------------------------------------------------------ Top executives of KirchGruppe's biggest creditor banks met on Wednesday to discuss the future of the embattled Munich-based media group, the Financial Times reported. The banks first gathered in Frankfurt at the invitation of Deutsche Bank chairman Rolf Breuer, followed by another meeting in Munich today for top banking executives called by KirchGruppe and HypoVereinsbank. The move comes as Kirch is expected to decide this week on whether to accept HypoVereinsbank's offer of over 1.1 billion euros ($964 million) for Kirch's 40% stake in publisher Axel Springer. HypoVereinsbank is among Kirch's largest creditors with 460 million euros of loans on its books. People close to the group still think it is possible that the stake may go to Deutsche Bank. The bank has denied any intention to bid for the Axel Springer shares. German politicians and bankers have been working on plans to carve up Kirch's most valuable assets to enable the group to manage its 5.6 billion euros of debt, mostly in short-term bank loans, and at least 2.3 billion euros in contingent liabilities due this year. KIRCHGRUPPE: Exec Admits Liquidity Woes, But Group Won't Fold ------------------------------------------------------------- Kirch Group Managing Director Dieter Hahn admits the company could face liquidity problems this year, but investors need not worry since the company's banks are now drawing a rescue plan. In an interview with Welt am Sonntag, Mr. Hahn admitted that an exercise this October by British broadcaster BSkyB on its option to sell back its 22% stake in Premiere would render the company illiquid. This option will cost the company US$1.5 billion, a huge chunk from its already thinning account. At present, the company is struggling to climb a US$4.3 billion debt mountain. But Mr. Hahn confirmed that negotiations with creditor banks are "going well, except for one bank that is pursuing its own interests." He did not name the bank. A cash injection is imperative before October in order for the company to weather any effect from BSkyB's exercise of its option. Still, Mr. Hahn says no matter what happens, the company is intent on keeping all its assets intact. This in response to BSkyB Chairman Rupert Murdoch's offer to aid Kirch in return for management control in Premiere. "Why should one break up one of the few future-oriented industries with two strong German players - Bertelsmann and us - just to please foreigners or the banks?" Mr. Hahn said. Kirch's assets include rights to Formula One racing, World Cup soccer and a film library, as well as a controlling stake in the ProSiebenSat.1 broadcaster and its five television stations. It also owns a 40 percent stake in Axel Springer, the conservative publisher of Germany's top-selling daily, Bild, and a string of smaller papers. ============= H U N G A R Y ============= MOL RT: Sale of Gas Operations Impossible Before Elections ---------------------------------------------------------- The sale of a majority stake in the natural gas operations of Hungarian oil and gas company MOL Magyar Olaj- es Gazipari Rt is nearly impossible before the general elections in April, Dow Jones Newswires reports. According to MOL Chairman Zsolt Hernadi, the size of the majority stake up for grabs is not clear yet. MOL is ready to sell as much as 100% of its gas operations, including domestic production, if the offer of state-owned bank MFB Rt is right, Hernadi said, declining to reveal further details of the government's offer. Company Chief Executive Gyorgy Mosonyi said that the gas operations is for sale not because it is generating losses, but because its growth potential is lower than that of the oil business. In the first nine months of 2001, MOL revealed losses of 14.29 billion forints ($51.6 million), while its gas division lost 111 billion forints. ========= I T A L Y ========= BLU SPA: Sets Shareholder's Meeting to March 5 ---------------------------------------------- Rome-based mobile phone operator Blu SpA has called for a shareholders' meeting on March 5, Dow Jones Newswires reported. The agenda of the shareholders meeting was not disclosed. Blu's shareholders are mulling over five non-binding bids for all or part of the company. If the board does not agree on a sale by March, the shareholders would have to inject more money to keep the company operating, a source close to the company told Dow Jones Newswires. The company has sufficient liquidity to take it through February, the report adds. Meanwhile, a BT spokeswoman said that liquidation would be an option if no firm bids will come. Blu said in January that Telecom Italia Mobile SpA, Enel- controlled Wind SpA, Hutchison Whampoa-backed H3G SpA, Vodafone unit Omnitel Pronto Italia SpA and Autostrade-Sitech SpA had submitted non-binding offers to buy all or part of Blu. Blu was valued at 1.2 billion euros ($1.04 billion) in December. FIAT SPA: Joint Venture Unit Gets EUR200MM Order From Spain ----------------------------------------------------------- Oto Melara SpA, an engineering and aerospace/defense group that emerged from a joint venture between Fiat SpA's Iveco SpA and Finmeccanica SpA, has inked a deal with the Spanish Defense Ministry, Dow Jones Newswires reported. The deal, worth 200 million euros, involves the sale of 62 armored 8X8 Centauro VRC-105 vehicles to be disposed over a six years period. The book of orders for Centauros now totals 500 units, including 16 vehicles currently being tested by the U.S. army. The debt burden of Fiat, the Turin-based car manufacturer, is among the highest of the European auto sector, with a net debt of about 6 billion euros ($5.21 billion) at the end of 2001. Fiat announced in December a drastic restructuring aimed at bringing its car unit into the black. In January, it raised the target for 2002 asset sales to 3 billion euros from 2 billion euros to halve the debt by year's end. =================== L U X E M B O U R G =================== CARRIER1 INTERNATIONAL: Files for Bankruptcy Protection ------------------------------------------------------- Unprofitable Pan-European bandwidth provider Carrier1 International S.A. petitioned the Luxembourg court requesting admission to a gestion controlee proceeding in order to manage an orderly realization of value from its assets. The telecoms provider expects its subsidiaries to also file for insolvency proceedings in their respective jurisdiction shortly, possibly this week. Carrier1 believes that the proceeding and the related moratorium on creditor claims will enable it to consider and pursue potential transactions involving the sale of all or part of its business. In a gestion controlee proceeding, a company's management requires the approval of a court-appointed official for certain actions and there is a moratorium on claims by creditors. Carrier also expects that it will be liquidated but does not expect there to be any recovery for its shareholders. In due course, the company's American Depositary Shares (ADSs) will be removed from the Nasdaq National Market System in the US and Germany's Frankfurt Neuer Markt. Last week, the company suspended its US voice traffic services because some key suppliers refused to continue to provide services without full payment for outstanding invoices or credit support for future voice services. At the end of January, Carrier1 had approximately $90.7 million of cash and cash equivalents, restricted cash (cash that is pledged as collateral on outstanding lines and letters of credit and guarantees to telecommunications companies) and available for-sale securities. Carrier1 is registered in Luxembourg. Its senior management are in Switzerland and London. Contact Keith Johnson at telephone +44 20 7001 6357 or via e-mail at Keith.Johnson@carrier1.com for further information. CARRIER1: S&P Cuts Long-term Credit Rating to D ----------------------------------------------- Credit rating agency Standard & Poor's Corp. downgraded the long- term corporate credit and senior unsecured debt ratings of Carrier1 International SA to D, from CC and C respectively. The bandwidth provider's ratings were removed from CreditWatch, where they had been placed since November. S&P foresees low recovery prospects for the company's bondholders after Carrier1 filed for creditors' protection, known as gestion controlee proceeding under Luxembourgeois law. The company also announced that it could not meet its US$15.5 million interest payments due on February 15, on its US$160 million and EUR85 million bonds. Carrier1 expects be liquidated in the future. =========== N O R W A Y =========== KVAERNER ASA: Norway Approves Kvaerner-Aker Maritime Merger ----------------------------------------------------------- The Norwegian Competition Authority has cleared the merger of Aker Maritime and the oil activities of Kvaerner, the Anglo- Norwegian engineering, construction and shipbuilding group that almost went bust. The merger approval was on the basis that the merged company would not have the opportunity of exercising market power through deliveries of new buildings and maintenance services to oil companies operating on the Norwegian continental shelf. Clearance from the U.S. authorities is expected in 10 days. Kvaerner staved off bankruptcy in November by agreeing to merge with its oil service rival Aker Maritime. Aker's merger with Kvaerner's Oil & Gas business area is expected by the middle of March 2002. For further information, please contact Torbjorn Andersen, Aker Maritime ASA Vice President for Corporate Communications, at telephone +47 22 94 53 90 or mobile +47 92 88 55 42 =========== S W E D E N =========== LM ERICSSON: To Cut up to 300 Jobs in Norway -------------------------------------------- Global telecom equipment maker Telefon AB LM Ericsson intends to shave off 300 jobs in Norway in compliance with its cost cutting measures implemented last year, Dow Jones Newswires reports. A spokeswoman said Tuesday that about 250 to 300 research and development personnel would be affected by the layoffs. The company's research and development activities which form part of Ericsson's fixed-line network business will now be transferred to its R&D sites abroad, spokeswoman Aase Lindskog disclosed. Ericsson, one of the world's largest manufacturers of equipment for mobile phones, eliminated or outsourced nearly 20,000 jobs last year amid 11% decline in sales. The Stockholm-based telecom equipment maker reported a full-year loss of 21.1 billion Swedish kronas (US$1.9 billion) last year. =========================== U N I T E D K I N G D O M =========================== BRITISH AIRWAYS: Will Cut up to 7,000 Jobs to Stem Losses --------------------------------------------------------- Cash-strapped British Airways will further reduce 6,000 to 7,000 jobs, eliminate more loss-making routes and reduce its operations at Gatwick in a bid to restore the group to profitability, the Financial Times reported. The BA board was also forced to bolster the position of chairman Lord Marshall, following a call from institutional investor Standard Life Investments for a signal from the board about the planning for a new chairman to help implement its so-called Future Size and Shape project that will alter BA's business plan. Lord Marshall said earlier he intended to stand for re-election at the shareholders meeting in July, when his three-year term expired. BA was badly hit by the September 11 catastrophe and the rise of low-cost airlines such as easyJet and Ryanair. The airline's debt level is 339 million pounds higher at 6.5 billion pounds, almost three times its market value. CONSIGNIA: Lay-off May Result in Pension Fund Shortfall ------------------------------------------------------- State-owned post office operator Consignia could be forced to inject GBP600 million more into its pension fund this year should it pushes through with its plan to axe 30,000 jobs. In a report by Arthur Andersen to Postcomm regarding the financial impact of opening the postal market to competition, the accountant claimed Consignia's move would result in an GBP800 million shortfall. "It said the company's plans to slash GBP1.2 billion from costs would likely mean it having to make additional contributions to its pension funds," Ananova said citing the report. Consignia has dismissed the accounting firm's analysis as speculation. A spokesman said any impact on the pension funds depended on the age of those workers eventually laid-off. The company has three separate pension funds, totaling GBP18 billion. It is one of the biggest schemes in Great Britain. ENRON CORPORATION: Bosses Collect GBP6.2MM From Centrica Sale ------------------------------------------------------------- Fourteen Enron managers shared a commission of 6.2 million pounds for helping find a buyer for Centrica, the U.K. retail arm of collapsed U.S. energy trader Enron, the Daily Telegraph reported. PricewaterhouseCoopers sold Enron Direct to the utility group Centrica in December for 96.4 million pounds. Although the division's 270 creditors were pleased with the final payout, which will amount to 55p to 75p for every 1 pound they are owed, many were surprised by the size of the commission. Director Chris Fisher of consultancy Qualtrak wants to know more as to what the managers did to earn it. Enron Corp. is selling its diminished assets to pay creditors a fraction of the more than $40 billion they are owed. It has fired 16% of Europe's 6,800 workforce in November. ENRON CORPORATION: Lord Wakeham Resigns From Board -------------------------------------------------- Lord Wakeham, along with five other directors, is resigning from the Enron board, Ananova reported. The others who stepped down were Ronnie Chan, Paulo Ferraz, Pereira Charles LeMaistre, Robert Jaedicke and John Duncan. Notice of the resignations was filed with the Securities and Exchange Commission after directors met in New York. Enron is in search for a new chairman and additional board members to help in its plan to return to its roots as a mover of natural gas and electricity, Ananova added. EQUITABLE LIFE: Faces Action From Policyholders ----------------------------------------------- Equitable Life's compromise is facing another crucial hurdle on Tuesday after a group of 300 former policyholders said it is suing the company to recover the losses incurred, reports the Financial Times. The Equitable Late Joiners Action Group appointed solicitors Travers Smith Braithwaite to pursue Equitable for compensation, claiming it should have told them about its liabilities when they bought their policies. Eljag chairman Neil Britten said they have lost more than 20% of their capital and they want it back. "We have been strongly advised there are no generic claims of this sort," Equitable said in a statement. Last week, the High Court has approved the compromise scheme to secure the financial stability of Equitable Life. The mutual is pressing ahead with plans to remove its 1.1 billion pounds guaranteed annuity rate liability by paying policyholders an uplift to their with-profits policies next month. Guaranteed annuity rate (GAR) policyholders will receive a 17.5% increase in the value of their policies in return for giving up their guarantees. Non-GARs will get an uplift of 2.5% for both accepting the GAR increase and agreeing not to sue the society for alleged mis-selling. JAZZTEL PLC: Moody's Cuts Ratings to Caa3 ----------------------------------------- Moody's Investors Service has lowered the ratings of Jazztel plc's senior unsecured notes on $735 million of debt two notches to Caa3 from Caa1, and lowered the senior implied rating to Caa2 from B3. The downgrade reflects Moody's concern that the London-based telephone company may have trouble paying its debt as it faces growing competition from Telefonica SA. In its ratings decision, Moody's has also taken into consideration Jazztel's limited liquid resources and unlikely access to additional capital markets funding. Moody's said that the revised profit expectations for 2001 and 2002 are significantly below the rating company's original expectations. RAILTRACK GROUP: EC Approves Government Aid ------------------------------------------- The European Commission will approve the emergency aid of 4.42 billion pounds in loans and guarantees that the British government has granted to bankrupt rail network Railtrack as a temporary measure to keep it running, Reuters reports. The loan, Reuters adds, is acceptable under European Union state aid rules and is due to the exceptional circumstances. The Commission's criteria for rescue aid mean it must be considered a loan for a maximum 12-month period and must be repaid with market-level interest. Railtrack went bankrupt in October 2001 when the government refused to continue bailing it out. RAILTRACK GROUP: Investors Puts Further Pressure on Byers --------------------------------------------------------- Railtrack investors have joined forces with Railtrack Group to pursue their legal action against Stephen Byers if the transport secretary does not release key documents leading to the collapse of the rail network operator. If the documents continue to be withheld, the Railtrack Shareholders' Action Group, Railtrack Group and the private shareholders action group will apply to the courts to force disclosure of all relevant documents. The action group, representing investors with more than 50% of Railtrack's suspended shares, asked late last year for Byers to release the documents. He refused and the Treasury Solicitor wrote back saying the action group did not have the necessary locus standi, or legal right, to bring a case. RAILTRACK GROUP: Three Directors Leave Board -------------------------------------------- Railtrack Group PLC, the parent company of the collapsed Railtrack PLC, announced the resignation of three senior directors from its board with immediate effect, the AFX News reported. Stepping down from the board are Railtrack Group's business development director Sebastian Bull, safety and operations director Chris Leah and technical director Richard Middleton. The three are reported to remain on the board of Railtrack PLC. In addition, David Harding will remain on the board of Railtrack Group PLC but will, however, step down from the board of Railtrack PLC. TOTALISE PLC: Court Appoints Administrators ------------------------------------------- U.K.'s High Court has named Stephen Ellis and Edward Klempka as administrators for Totalise Plc after the Internet service provider said it has failed in its efforts to secure further funding. Totalise posted a net loss for the six months ended October 31 of 3.2 million pounds. It raised 2 million pounds last year and was trying unsuccessfully to raise a further 800,000 pounds by selling shares. Founder and Chief Executive Officer Peter Gregory, who also resigned from the board, made an offer for various assets of the business, including all trading subsidiaries and intellectual property. The administrators have accepted Gregory's offer. No terms were disclosed. Under new ownership, all the trading subsidiaries will continue to operate as normal and therefore no customers, suppliers or staff of these subsidiaries will be affected by the decision to appoint an administrator to the Totalise PLC holding company. Totalise, which is listed on London's Alternative Investment Market, has a market value of 3.2 million pounds ($4.5 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 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. 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