/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/020418.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, April 18, 2002, Vol. 3, No. 76 Headlines * G E R M A N Y * BAYERISCHE LANDESBANK: Chief Says KirchMedia Exposure Not Fatal KIRCHGRUPPE: Other Units to Declare Insolvency, Say Insiders SCHNEIDER TECHNOLOGIES: Row Over Bringing Loan Endangers Rescue * I R E L A N D * EIRCOM PLC: New Outsourcing Strategy to Require 1,500 Job Cuts * N E T H E R L A N D S * KPNQWEST NV: Will Be Forced to Restructure Debts, Say Banks LAURUS NV: Due Diligence Exercise Moved Until April 25 UNITED PAN-EUROPE: Auditor Sees Bankruptcy Over Horizon * S P A I N * JAZZTEL PLC: To Renegotiate EUR 676MM High-yield Debts * S W E D E N * LM ERICSSON: Telfort to Outsource Network Operations to Ericsson * U N I T E D K I N G D O M * ARTHUR ANDERSEN: Ernst & Young Beats KPMG to Andersen France BRITISH TELECOM: In GBP 170MM Contract to Run Redstone's Network BRITISH TELECOMS: Notification of Directors' Interests CONSIGNIA: Sends Health Services Unit to U.S. Firm for GBP 70MM ENODIS PLC: Notification of Shareholders' Interest MARCONI PLC: Bondholders Want Not Only Equity, But Cash as Well MARCONI PLC: Workers Demonstrate, Send Plea to Parliament NTL INCORPORATED: Makes Official US$10.6 BB Debt-for-equity Swap NTL INCORPORATED: Bondholders to Snatch U.K., Irish Operations NTL INCORPORATED: Cablecom Creditors Could Stall Approval of Plan NTL INCORPORATED: CEO Knapp, CFO Gregg Hold on to Posts NTL INCORPORATED: Company Profile PACE MICRO: Set-top Box Maker Relieved Over Restructuring Plan SSL INTERNATIONAL: Trading Update Reveals Job Cuts, HO Closure SSL INTERNATIONAL: Latest Warning Cuts Market Value by GBP 300MM ============= G E R M A N Y ============= BAYERISCHE LANDESBANK: Chief Says KirchMedia Exposure Not Fatal --------------------------------------------------------------- Bayerische Landesbank, one of the four major banks owed by KirchMedia, says its finances is not threatened by the firm's insolvency filing. In a report by AFX News, the bank said there is no need to provide additional risk provisions on its 2001 books as it has more than enough cover to ensure the bank is not affected. "All talk about a crisis scenario (at the bank) is made up and is damaging (the bank's) reputation," bank head Werner Schmidt told the news agency. "Our involvement with Kirch cannot put our stability in danger in the slightest," he added. Mr. Schmidt pointed out that KirchGruppe's "substantial real estate holdings" could cover the credit extended by the banks to the group, which total EUR7 billion. But Mr. Schmidt admitted that it is doubtful KirchGruppe investors will see their money again. The bank has EUR1.9 billion exposure in the troubled media group. KIRCHGRUPPE: Other Units to Declare Insolvency, Say Insiders ------------------------------------------------------------ Kirch insiders say various units of the troubled media empire will file for insolvency soon, as KirchMedia's insolvency application has failed to improve their condition. German daily Handelsblatt says likely to follow KirchMedia are KirchBeteiligungs GmbH & Co. and majority shareholder Taurus GmbH & Co. KG, and KirchPayTV. KirchBeteiligung holds a 40% stake in publishing house Axel Springer and a majority stake in the rights holder for Formula One motor racing. It also holds a stake in Constantin Film AG, the paper says. KirchPayTV, on the other hand, controls Premiere, the lost-making pay-TV venture in which Rupert Murdoch holds an interest and against which he plans to exercise a multi-billion-dollar put option in October. According to the paper, KirchMedia subsidizes the operations of these units. With its application for insolvency, the funds have necessarily stopped flowing. Initially, though, the filing was thought as a quick fix to KirchMedia's woes, as banks had planned to form a new company free of some debts and infused with fresh capital. This plan is now headed nowhere due to the discovery of undisclosed liabilities that have dampened investors' confidence. Now, insiders say it won't be long that the three units will follow KirchMedia to the courts. But the report says there are still some who are entertaining hopes that Rupert Murdoch will eventually come to the group's rescue. They point out that Mr. Murdoch has an option to sell his 22% stake in Premiere back to Taurus and he has said he intends to exercise this option. If Taurus were to file for insolvency, this option would become worthless. SCHNEIDER TECHNOLOGIES: Row Over Bringing Loan Endangers Rescue --------------------------------------------------------------- The rescue of German electronics maker Schneider Technologies AG has been compromised by the stand off between LfA and the interim administrator over a EUR175,000 bridging loan. The Financial Times Deutschland says there is still no clear indication who will pick up the tab, just days before the company has to secure the amount to cover the costs of a capital increase. The money is due tomorrow. LfA, the regional lending bank of the Land of Bavaria, believes management should cough up the money given that it's a relatively small amount. Besides, the bank said, its main reason for helping the company is to secure jobs in Bavaria. The bank also pointed out that the insolvency plan focuses on the laser technology unit in Gera, situated in the Land of Thuringia. This clearly shows that it's management's responsibility to produce the amount. ============= I R E L A N D ============= EIRCOM PLC: New Outsourcing Strategy to Require 1,500 Job Cuts -------------------------------------------------------------- Eircom Plc, the troubled Irish telecom company acquired by Valentia last year, is considering cutting 1,500 jobs as part of a plan to outsource some of its operations, The Times said. In a report early this week, the paper said the company under the direction of newly appointed CEO Philip Nolan has been holding secret talks with Accenture and IBM Global Services over the possibility of getting them to run the phone business. Sources told the paper that the contract currently being negotiated could be worth up to EUR1 billion over 10 years. The report says outsourcing the company's operations is one of the major strategies being considered by new management to turn around the business. Mr. Nolan is reportedly planning to farm out at least six core sections. These sections allegedly include billing, property, data centers, information technology, transport and finance, particularly the management accounts section. Human resources is another candidate, but it may prove problematic and may only be partly done by outsiders, the report says. A telecommunications source estimates that the plan could easily affect 1,500 staff. The other strategy also getting attention from management is selling non-core units such Eircom PhoneWatch, the alarm company; Accuris, the marketing software development company; and its 62% stake in Golden Pages, the telephone-directory company. Accordingly, such disposal could help the company improve its balance sheet, which is now believed to have EUR75 million printed in black. Valentia sources, however, say there is no rush to sell properties, as the consortium's first loan repayment is still almost five years away. Led by Tony O'Reilly, Valentia acquired the company for EUR3 billion. ===================== N E T H E R L A N D S ===================== KPNQWEST NV: Will Be Forced to Restructure Debts, Say Banks ----------------------------------------------------------- Credit Suisse First Boston and Morgan Stanley doubt KPNQwest NV could continue operations until 2009 without needing to restructure its debts, Total Telecom said Tuesday. The industry paper said Credit Suisse is in the opinion that the company will run out of cash by the end of 2003, supporting the likelihood of renegotiating debts. Basing its analysis on the 2001 results of the company, the bank expects the joint venture to have a funding gap of EUR600 million to EUR750 million "before reaching positive free cash flow in 2009." This calculation excludes bond refinancing considerations, the report says. The bank also estimates net debt to rise 18 times annual EBITDA for the year 2002. To dampen its outlook further, the bank says it appears parent company KPN is no longer committed to the carrier as part of its core business. The unit could not also expect help from Qwest, as it has its own "balance sheet and liquidity issue." The bank's analysis affirms that of Morgan Stanley, which also published last month an analysis tending on the same line. Said study conducted by Steve Franck expected the KPNQwest to have "a funding gap of EUR50 million to EUR175 million in the 2003-2004 timeframe." In Franck's view, restructuring at KPNQwest could begin mid-2003, when it is thought the company will reach maximum capacity on its EUR500 million revolver loan, the report says. LAURUS NV: Due Diligence Exercise Moved Until April 25 ------------------------------------------------------ Both Companies, Laurus NV and Casino SA, now expects that the due diligence investigation by Casino and the banks has proved to be more time consuming than initially envisaged. Thus, the exercise of due diligence will be completed by April 25, 2002. On March 7, 2002, Laurus NV announced it reached an agreement in principle with Casino SA and ABN AMRO Bank, ING Bank and Rabobank to raise EUR400 million of new equity and to reschedule existing bank debt. At that time, it was forseen that the due diligence by Casino and the banks would be completed no later than April 15, 2002 and that signing of the definitive agreement would take place no later than May 15, 2002. Both companies still expect that the definitive agreement will be signed no later than May 15, 2002. Further announcements with respect to the proposed transaction will be made around that date. UNITED PAN-EUROPE: Auditor Sees Bankruptcy Over Horizon ------------------------------------------------------- Arthur Andersen, the auditor of Dutch cable operator United Pan- Europe, says the stricken firm could be forced to seek bankruptcy protection if it fails to cut a deal with bondholders. "The company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern," Andersen wrote in a document filed recently with the Securities and Exchange Commission. According to the New York Times, the company has some convincing to do with bondholders owed some EUR7.5 billion. It's likely strategy is to swap most of these securities for new stocks in the company. Liberty Media, owned by cable tycoon John Malone, is expected to take control of the company after a debt-for-equity swap. He bought most of the cable operator's bonds last year at pennies on the dollar. Last Friday, the company bared losses of EUR4.4 billion in 2001, more than the EUR2 billion it lost the year before. It also recorded in its 2001 books a write-down of EUR1.5 billion on the value of its fixed assets. ========= S P A I N ========= JAZZTEL PLC: To Renegotiate EUR 676MM High-yield Debts ------------------------------------------------------ Cash-strapped Spanish telecoms operator Jazztel Plc announced Tuesday that it is restructuring a total of EUR676 million in high-yield debt to reduce its interest bill. In a statement quoted by Reuters, the company said it had already secured a waiver from lenders under a EUR199.5 million senior performance bond and credit facility. The pact will allow the firm to restructure its high-yield debt and borrow up to EUR50 million. It also "could result in a significant dilution of the current holders of ordinary shares," the statement read. Reuters says Goldman Sachs International and J.P. Morgan had been commissioned to formulate strategies in carrying out the debt restructuring. "The financial restructuring represents the first step for Jazztel to be able to play a leading role in the consolidation of the Spanish telecommunications market," CEO Antonio Carro told Reuters in an interview. The company also announced that it is reviewing its business plan in order to cut costs and improve its margins. The company "will provide revised guidance to the markets in the forthcoming weeks," the statement said. In other developments, France Telecom Finance Director Jean-Louis Vinciguerra told Reuters that the planned merger between its Uni2 unit and the small Spanish carrier has been stalled. "There have been discussions between Uni2 and Jazztel but these have not made significant progress recently," he told the news agency in a telephone interview. "We continue to talk, but no commitment at this stage." Mr. Vinciguerra did not state any reason for the suspension of the merger talks or why no deal has been firmed up yet. =========== S W E D E N =========== LM ERICSSON: Telfort to Outsource Network Operations to Ericsson ---------------------------------------------------------------- Mobile equipment maker Ericsson, with Telfort, have made an agreement about outsourcing all of Telfort's mobile network operations to Ericsson. For Ericsson, this is a landmark in the strong trend towards outsourcing of networks. Telfort and Ericsson have signed a letter of intent for the outsourcing of network operations. Parties expect to sign the definitive contract in July 2002. The network remains the property and under full control of Telfort. Ericsson will take care of the daily network operations, but will also take on other tasks such as planning, design and implementation. Ericsson supplied Telfort's current network for the greater part. Furthermore, arrangements have been made with Ericsson for the rollout of the future 3G network. "The agreement is a new step in our O2 strategy," says Ton aan de Stegge, CEO for Telfort, "in which we can focus more and more on our business, in other words offering our customers the services they want, and less on running an increasingly complex technology. The network is not our core business, but core to our business. As a result of this efficiency improvement we will realise cost savings as well." "This step confirms Ericsson's clear leadership not only in 2G and 3G, but also in the market for network management services and is the biggest management services agreement in the telecom sector to date," says Bert Nordberg, head of Ericsson Global Services of Ericsson. "Ericsson has over time signed well over 30 Managed Services contracts." Ericsson, through its continuous technology leadership, provides innovative solutions in over 140 countries. Telfort has 1.3 million customers (dec. 2001) and is a wholly- owned subsidiary of mmO2 plc. O2 is listed on the London and New York stock exchanges. O2 is represented in the Netherlands by Telfort, in the UK by BT Cellnet, in Germany by VIAG Interkom, in Ireland by Digifone and on the Isle of Man by Manx Telecom. Genie is the mobile Internet division of mmO2. For further information, please contact: Ase Lindskog, Director Media Relations Corporate Communications, Ericsson Phone: +46 730 244872 E-mail: ase.lindskog@lme.ericsson.se Annika Molander, Press Manager Global Services Corporate Communications, Ericsson Phone: +46 703 151142, E-mail E-mail: annika.molander@lme.ericsson.se =========================== U N I T E D K I N G D O M =========================== ARTHUR ANDERSEN: Ernst & Young Beats KPMG to Andersen France ------------------------------------------------------------ The French affiliate of weakened accounting giant Arthur Andersen has defected to the camp of Ernst & Young, reports AFX News. The report says the integration will be carried out slowly; hence, Andersen France will operate separately from Ernst & Young France for a while. The combination is still subject to scrutiny and approval by European competition authorities. The move deprives once more KPMG of a prized affiliate in the Andersen global practice. The accounting firm was earlier favored by the main office to snatch its practices outside the United States. With the acquisition, Ernst & Young is now the largest auditor in France in terms of turnover. BRITISH TELECOM: In GBP 170MM Contract to Run Redstone's Network ---------------------------------------------------------------- BT announced Tuesday that it has won a GBP170 million six-year contract to run communications services provider Redstone's national voice network. This is the first time that BT has offered its complete facilities management service to cover all aspects of another operator's network infrastructure. Under the terms of the deal, BT Wholesale will assume ownership and responsibility for the day-to-day operations of Redstone's infrastructure. Redstone will continue to retain control over critical aspects of its operation, but be able to focus on marketing, selling and servicing its growing customer base with a range of voice based services. Paul Reynolds, chief executive of BT Wholesale, said: "We are delighted to be signing this deal with Redstone. We believe that it demonstrates how our expansion into network facilities management enables us to help our clients meet the current and future demands on their networks. Redstone is taking an innovative and sensible approach to building its business in the current market conditions and we believe this deal gives an innovative new model for the wholesale outsourcing market." BT Wholesale will be providing the full day-to-day operation and management of Redstone's network, which is one of the largest guaranteed bandwidth networks in the U.K. The GBP170 million contract includes and protects existing interconnect revenues. Under the agreement, approximately twenty Redstone employees associated with the Redstone network are expected to transfer to BT Wholesale under TUPE regulations. The deal will allow Redstone, whose customers range from small and medium sized businesses to larger corporates to concentrate its resources on developing its solutions portfolio, comprising voice, data, internet and telecoms technologies for the highly competitive business communications marketplace. Ian Brown, Chief Executive Officer of Redstone, said: "Running a profitable telecoms network today is a high volume, low margin business. This agreement with BT Wholesale allows us to play to our strengths of responding to our customers with integrated communications solutions, confident in the knowledge that our network is being professionally managed by the largest and most experienced telecoms operator in the UK." BT Wholesale provides comprehensive network services within the UK to more than 500 communication companies, network operators and service providers, including other BT businesses; BT Retail, BT Ignite and BTopenworld. BT Wholesale seeks to build complete communications packages working with its customers to help them succeed in their businesses. The BT Wholesale portfolio provides a comprehensive range of wholesale and service provider products including asymmetric digital subscriber line (ADSL), internet protocol (IP) access, the bulk delivery of private circuits, frame relay and integrated services digital network (ISDN) connections for service providers and operators. BRITISH TELECOMS: Notification of Directors' Interests ------------------------------------------------------ Paul Reynolds, a company director at BT Group plc, with Halifax Corporate Trustees Limited as Trustee of the BT Group Employee Share Investment Plan, declares that under terms of the plan, he purchased on April 12, 2002 of 50 ordinary shares of 5p each at 254.5p per share. After this announcement, the director's interests are summarized as follows: a. 34,051 ordinary shares - personal holding; b. 191,668 ordinary shares under BT Incentive Share Plan - contingent award; c. 39,445 shares under BT Deferred Bonus Plan; d. 45,675 shares under BT Executive Share Plan; e. Options over 4,555 shares over BT Group Employee Sharesave Scheme; f. Options over 1,483 shares under BT Employee Sharesave Scheme; g. 219 shares under the BT Employee Share Ownership Scheme; h. 144 shares under BT Group Share Investment Plan. The director's total number of shares or debentures over which options held following this notification is equal to 6,732 shares. The said director has technical interests, as at March 15, 2002 under Section 13 of the Companies Act based on the following: A technical interest, together with all employees of BT Group plc in 45,274,661 Ordinary Shares held by the Trustee, The Royal Bank of Scotland Trust Company (Jersey) Limited to satisfy the exercise of options under the BT Employee Sharesave Scheme 1994; A technical interest, together with all employees of BT Group plc in 24,571,130 Ordinary Shares held by Ilford Trustees (Jersey) Limited in respect of contingent awards under executive share plans; A technical interest, together with all employees of BT Group plc in 73,069 Ordinary Shares held in the name of BT Employee Shares Trustees Limited. Contact Graeme Wheatley at telephone no. 020 7356 5152 for further details regarding this announcement. CONSIGNIA: Sends Health Services Unit to U.S. Firm for GBP 70MM --------------------------------------------------------------- Consignia will reportedly sign a GBP70 million contract with SchlumbergerSema within weeks to help cut cost in terms of health services to employees, the Scotsman said Tuesday. The paper said the contract is good for five years. Some 240 medical and administrative staff of the company will transfer from Consignia to SchlumbergerSema on existing terms and conditions. SchlumbergerSema is allied to a global services giant that has its headquarters in New York, the paper said. The outsourcing of health services follows recent announcement by Consignia of its intention to farm out support services not core to the postal network. The company wants to save GBP60 million a year. ENODIS PLC: Notification of Shareholders' Interest -------------------------------------------------- The London-based food service equipment manufacturer Enodis plc declares that Putnam Investment Management LLC and The Putnam Advisory Company LLC has a total holding of 27,576,200 50p ordinary shares in the company. The interest is equivalent to 6.88% of the total shares issued by Enodis. For further details regarding this notification, contact R. Syms at telephone no. 020 7304 6000. EQUITABLE LIFE: Blames E&Y for Missed Sale Opportunity in Suit -------------------------------------------------------------- Equitable Life says it would have been spared the troubles of striking a compromise deal with policyholders this year and could have gotten a decent offer had Ernst & Young done its job properly. The company says had the former auditor suggested to sell the business in 1998, it could have commanded a price tag of GBP2.9 billion. These estimates are contained in the multi-billion-damage claim recently filed by the company before the High Court in London, the Financial Times says. Equitable pointed out that had Ernst & Young advised the board then that the mutual's statutory accounts should have had provisions for guaranteed annuity liabilities, the directors would have likely concluded that the best option would have been to seek a buyer, at a time when the mutual still had substantial value to third parties. Meanwhile, the document also disclosed that the company faces potential claims from the Inland Revenue concerning policies sold from 1990 through the mutual's Guernsey branch to customers residing outside the U.K. The company did not put a value on said claims, but said the auditor advised it on the status of the Guernsey branch and should have advised the board if such tax liabilities ought to have been provided for in its accounts. Ernst & Young denies all the allegations in the GBP2.6 billion suit. MARCONI PLC: Bondholders Want Not Only Equity, But Cash as Well --------------------------------------------------------------- Bondholders will not participate in a debt-for-equity swap unless they are offered some money to recoup part of their investments, Bloomberg says. Citing a Credit Suisse First Boston analyst, the news outfit says the cash payment could be as high as GBP500 million. "Bondholders will want cash in order to partly compensate for the loss they face in a restructuring," Bear Stearns analyst Louis Landeman told Bloomberg in an interview. The paper says bondholders are eyeing the GBP1.4 billion proceeds from the asset disposals the company had implemented recently. "The cash belongs to the debt providers," explained Stuart Stanley, an analyst at AXA Investment Management. As part of its rescue plan, Marconi is asking bondholders to swap the US$2.6 billion they're owed for shares. This, however, will put them last in the queue in case the company files for bankruptcy. Bondholders say they won't take that risk without any cash payment. At the moment, the two groups of creditors are on equal footing. This, as the banks failed to attach conditions called covenants to their loans in May last year. These covenants would have allowed Barclays, HSBC Holdings Plc and other lenders to get their money ahead of bondholders. The company's debts currently stand at GBP3 billion. Banks are owed GBP2.2 billion. MARCONI PLC: Workers Demonstrate, Send Plea to Parliament ----------------------------------------------------- --- Fifty section members of U.K. private sector union Amicus-MSF from the Liverpool sites of Marconi, the struggling telecommunications company, held a pre-budget Giant Mobile Phone demonstration at College Green Westminster Tuesday This have been followed by a lobby of Merseyside MPs where Marconi workers brought placards demanding help from Gordon Brown's budget. Amicus demands that the Chancellor kick-starts the government policy on achieving top 5 Internet broadband access status within Europe. Such a policy would mean safeguarding and creating many thousands of jobs within Britains Telecommunication's industry. Broadband Britain currently lags far behind other European countries, only 0.2% of the population have access and Britains position of 21st in the league table is way behind the Governments target. Countries such as the Czech Republic and Poland are above the UK, with Germany signing up more people each week for broadband access then the UK's total of 0.2%. Roger Jeary, Amicus National Secretary said, "Gordon Brown has an excellent opportunity of giving a massive boost to Britains Telecommunications industry. What we want to see is him announcing investment in IT for Schools, the NHS and the Public sector in general. This will in turn generate business opportunities for Telecommunications companies such as Marconi and will start to fulfil Government policy in this area. It's a win-win situation for the Chancellor, Industry and Amicus members". NTL INCORPORATED: Makes Official US$10.6 BB Debt-for-equity Swap ---------------------------------------------------------------- NTL Incorporated officially confirmed Tuesday what had been rumored for weeks that it is handing control of the firm to its bondholders in exchange for wiping out most of its debts. According to the Financial Times, the debt restructuring will involve bonds worth US$10.6 billion, which will be exchanged for equity in the company. Its immediate benefit will be the slashing of the company's US$1.4 billion annual interest bill. The restructuring, said to be the largest ever attempted, would also put some of NTL's business into Chapter 11 bankruptcy in the United States, the paper says. The biggest loser of this equity overhaul is France Telecom, which had already lost more than EUR6 billion on its investment during the last three years, the paper says. The deal still needs approval of the firm's banks. Credit Suisse First Boston, JP Morgan and Morgan Stanley advised NTL on the deal with the bondholders. UBS Warburg took up the bondholders' side. Rothschild and Salomon Smith Barney advised France Telecom, the report says. The company says operations will continue as normally as possible even if the firm files for bankruptcy in the U.S., where its main divisions are registered. The Financial Times compiled these figures to show how NTL compares to the largest corporate bond defaults of 2001: Enron Corporation - US$9.9 billion Finova Capital Corporation - US$6.3 billion Pacific Gas & Electric - US$5 billion XO Communications - US$4.9 billion Southern California Edison - US$3.6 billion NTL fact file: Number of subscribers across all businesses: 2.84 million (at the end of 2001) Businesses: NTL (UK) Cablelink (Ireland) Cablecom (Swiss) Noos (France) eKabel 2 (Germany) B2 (Sweden) Revenues: GBP2.57 billion Ebitda: GBP492 million Net loss: GBP15.9 billion NTL INCORPORATED: Bondholders to Snatch U.K., Irish Operations -------------------------------------------------------------- Bondholders will hold 100% control of the core NTL businesses in the UK and Ireland after the company emerges from Chapter 11 bankruptcy, reports the Financial Times. The paper says these two units were the main focus of negotiations over the last few weeks between bondholders and NTL management. The two key businesses will come out from bankruptcy with a total debt of US$5.8 billion and about 3 million customers. It will also receive new short-term funding of up US$500 million. Some US$800 million worth of bonds will still be serviced after the bankruptcy, says the paper. These are the bonds issued by NTL's Diamond and Triangle units. Banks need not worry though, as bondholders are setting aside money to pay interest on their loans. After emerging from bankruptcy, bondholders plan to offer the current NTL preferred shareholders about 30% of the restructured company. The paper says this concession was the most heated area of discussions. Meanwhile, there is still no fixed plan for the rest of NTL's European networks, the paper says. This subject is still being contested by bondholders and creditor banks. So far, it appears that NTL's cable assets in Switzerland, Germany and Sweden will be merged into a separate company known as NTL Euroco. Bondholders will own 86% of the new company, while common stockholders, excluding France Telecom, will take 10%. Preferred shareholders including France Telecom will own the rest. The French firm, meanwhile, will back the stake it sold to NTL in Noos, the French broadband company. NTL INCORPORATED: Cablecom Creditors Could Stall Approval of Plan ----------------------------------------------------------------- The restructuring plan of British cable operator NTL could still be held up by banks, especially by the creditor banks of Cablecom, the company's Swiss unit, reports the Financial Times. The paper says JP Morgan Chase and Morgan Stanley Dean Witter allegedly want bondholders to put more money into Cablecom or redirect some of the US$300 million raised from the sale of NTL's Australian mast network to the Swiss subsidiary. A person privy to the negotiations told the Financial Times that what's keeping bondholders from bothering with Cablecom is its "questionable" future. "Although the Cablecom debt is ring-fenced, banks which have lent against both U.K. and Swiss assets could hold up an agreement on the U.K. side," the paper says. If no agreement were reached, Cablecom would likely be liquidated, people close to the situation told the paper. They, however, say this is no-one's preferred solution. NTL INCORPORATED: CEO Knapp, CFO Gregg Hold on to Posts ------------------------------------------------------- Incumbent NTL CEO Barclay Knapp will retain his post even after the restructuring of the company's debts is over, Ananova said Tuesday. Mr. Knapp, whose ambition reportedly led NTL to rack up at one point close to US$20 billion in debts, is believed to have secured his post as part of the deal with bondholders. The beleaguered CEO, who also founded the company in 1993, admits, however, that he is willing to step down at anytime the bondholders would request it. The Financial Times says John Gregg, NTL's chief finance officer, will also remain in his post throughout the restructuring. Mr. Knapp says operations will remain unaffected by the restructuring deal, which will trigger a pre-arranged Chapter 11 bankruptcy filing in the US. NTL INCORPORATED: Company Profile --------------------------------- Name: NTL UK NTL House Bartley Wood Business Park Bartley Way, Hook Hampshire, RG27 9UP UK Phone: 01256 752000 Fax: 01256 752100 Website: http://www.ntl.com/ NTL Broadcast Crawley Court, Winchester Hampshire, SO21 2QA UK Phone: 01962 823434 Fax: 01962 822378 SIC: Cable TV Newtwork Operator and Data Communications Carrier Employees: 23,880 Net Loss: US$15.9 million (2001) Total Assets: US$27.6 million (09/30/01) Total Liabilities: US$22.5 million (09/30/01) Type of Business: NTL operates broadband cable networks for telephone, television and Internet connections to provide services to homes and businesses on a global scale. The company's corporate head office is located in New York, while its operational head office is in Hook, Hampshire, in central England. Trigger Event: The cable TV and telecoms carrier defaulted on its US$96 million interest payments due last April. Through a series of acquisitions (such as Cable & Wireless Communications in the UK and Cablecom in Switzerland) and construction of its broadband network, NTL's debts mounted to an estimated sum of US$17.0 billion. With NTL at the brink of collapse, NTL's chief executive Barclay Knapp said Tuesday the company would seek Chapter 11 bankruptcy protection. He also agreed, in principle, to a debt-for-equity swap and reorganization. A committee of 12, considered to represent half of NTL's bondholders, agreed to convert the company's US$10.6 billion debts into equity. The group further agreed to provide additional US$500 million in fresh funds to finance NTL's British and Irish operations. The reported unofficial committee representing half of NTL's bondholders is said to include Oaktree Capital, Angelo Gordon & Co., Fidelity, Franklin Resources Inc., Huff & Co. and Appaloosa Investment Ltd. In the UK: Managing Director, Chief Operating Ofcr, NTL UK: Stephen A Carter Managing Director, NTL Home: Stephen A Carter Managing Director, NTL Business: Mike Wagner Managing Director, NTL Broadcast: Peter Douglas In the US: Chief Executive Officer: Barclay Knapp Senior Vice President, Chief Financial Officer: John F. Gregg Vice President, Corporate Finance and Development: Bret Richter NTL Incorporated 110 East 59th Street 26th Floor NY NY 10022 USA Phone: 00121 290 684 40 Fax: 00121 275 211 57 In the US, Investor Relations: Director, Investor Relations: Tamar Gerber E-mail: investor_relations@ntli.com Tel: (+1) 212 906 8440 In France: Managing Director & Chief Operating Officer: Bruno Claude NTL Europe 8 rue de Christophe Colomb 75008 Paris, France Phone: 00331 444 334 34 Fax: 00331 444 334 35 Financial Advisers: Credit Suisse First Boston JP Morgan Morgan Stanley Auditors: Ernst & Young No. of Shares in Issue: 276.6 million (10/31/01) PACE MICRO: Set-top Box Maker Relieved Over Restructuring Plan -------------------------------------------------------------- Pace Micro Technology CEO Malcolm Miller is perhaps the happiest executive in all of Britain these days now that NTL has agreed on a debt restructuring plan with bondholders. In an interview with Ananova, Mr. Miller said the latest development at NTL means better times ahead for his company. "I would like to think this may be the point at which things begin to turn, I am hopeful this will be the case," he told Ananova. Early this week, the set-top box maker issued its fourth profit warning in seven months, projecting losses in the second half of its financial year. The company put the blame on market conditions dampened further by the woes of ITV Digital and NTL. The company said only 50,000 of its new GBP100 digital TV adapter set-top boxes have been made due to the fallout following ITV Digital's collapse. The firm also stopped delivery to NTL early this year after failing to secure trade credit insurance to cover shipments, the report says. Mr. Miller, however, says his company will lay off some of its 950 staff despite the NTL breakthrough. He says the guillotine will start operating within the next six weeks. SSL INTERNATIONAL: Trading Update Reveals Job Cuts, HO Closure -------------------------------------------------------------- SSL International plc, the global manufacturer and distributor of premium healthcare products and brandnames, announced its trading update for the second half of the year ending March 2002. The manufacturing group, headed by Brian Buchan as chief executive, announced Tuesday an overhead reduction plan which involves the restructuring of the Group's functions in Europe. The move will affect a total of about 300 jobs (proposed loss) split evenly between the U.K. and the rest of Europe. The scale of the restructuring is likely to mean that significant compulsory redundancies will be required. As part of this restructuring, the Group's head office at Toft Hall in Cheshire will be closed, with staff to be relocated either to other existing SSL premises in the North West or to SSL's small corporate office in London. No manufacturing jobs are affected by these present plans. However, the Board's ongoing review is addressing logistic and distribution processes, including a fundamental re-examination of manufacturing systems and operations to be concluded by the end of the year. Since the Group's last reported interim results in November, trading has continued broadly in line with the Board's expectations. Sales for the year are expected to amount to approximately GBP595 million and the task of eliminating trade loading is now complete. Profits for the year are anticipated to be in line with market estimates, including the Group's planned increase in advertising and promotional spend. The Board's strategy of developing the Group's core brand portfolio, Durex, Scholl, Regent and Hibi, is progressing satisfactorily. In March, the Group completed the planned divestment of its smaller UK over-the-counter brands for GBP13.5 million. The Board continues to review potential acquisition opportunities that will add value to the Group's portfolio. In the current year, underlying mid-single digit sales growth is anticipated for both the consumer and medical businesses. The Board's ongoing business review has identified that radical action is necessary to reduce overhead costs in order to improve margins and shareholder returns, while continuing to invest in R&D, brand strength, IT systems and employee development. The existing high level of operating costs in the Group, particularly in Europe, reflects over-manning, duplication of activity and increased insurance costs. As a result, the Board is revising its estimate of pre- exceptional operating margin for the current year to between 13% and 14% of sales, well ahead of the year just ended, but lower than the 15% to 16% previously estimated. Thereafter, the Board anticipates that the operating margin will show further improvement as a result of growing sales and the actions being taken to reduce costs. The action to reduce European overheads is expected to result in a one-off cost of the order of GBP18 million during 2002. The Board anticipates that this will lead to annual cost savings of a similar amount, which will accrue progressively during this financial year. For further information, please contact: SSL INTERNATIONAL PLC (01565 624000) Brian Buchan, Chief Executive Garry Watts, Group Finance Director THE MAITLAND CONSULTANCY (020 7379 5151) William Clutterbuck or Brian Hudspith SSL INTERNATIONAL: Latest Warning Cuts Market Value by GBP 300MM ---------------------------------------------------------------- SSL International blamed Tuesday the escalation of insurance cost following the September 11 incident as the reason for issuing its latest profit warning, The Times said. The company said it is going to book a 13% to 14% decline in operating margins for the current year. It said business interruption insurance is responsible for the fall. The company, which manufactures a host of products from condom to corn plaster, said insurance cost post September 11 had gone up to GBP8 million from GBP2 million just a year ago. CEO Brian Buchan said the company will cut a further 300 jobs and sell Toft Hall, its headquarters building in Cheshire. The edifice is valued GBP3 million. "We have got fat and we have to deal with that," Mr. Buchan told The Times The latest profit warning sent the company's stocks on a 28% spiral, entering the company's annals as the worst drop in four years. More than GBP300 million was wiped off the company's market value on Tuesday as its shares fell 161.5p to close at 419.5p. *********** 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, Larri-Nil Veloso 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 US$575 per half-year, delivered via e-mail. 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