/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/020426.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, April 26, 2002, Vol. 3, No. 82 Headlines * B E L G I U M * GIB SA: Opts for Liquidation of Holdings Due to Bleak Future * F I N L A N D * SONERA CORPORATION: Sells Primatel Ltd Stake to YIT for EUR41.6MM * F R A N C E * LVMH: Luxury Goods Group's 2002 First-Quarter Sales Increase 8% LVMH: Completes Pommery Brand Sale to Vranken Monopole MONTPARNASSE MULTIMEDIA: Multimedia Takes Over Software Maker * G E R M A N Y * COMMERZBANK: To Shake up Units to Become Leader in Evolving Trend FAIRCHILD DORNIER: Needs Written Affirmation of China Deal HERLITZ AG: Three European Competitors Vie for Spoils SOFTWARE AG: Q1 Losses Unprecedented, 2002 Prospects Uncertain TV.BERLIN: Kirch Empire Takes 2nd Blow With Channel's Insolvency * I R E L A N D * ALLIED IRISH: Drops PricewaterhouseCoopers, to Hire New Auditor * N E T H E R L A N D S * KPNQWEST NV: Hires Bear Stearns to Improve Its Balance Sheet * P O L A N D * ELEKTRIM SA: Subsidiary Files Bankruptcy Petition in Warsaw * R U S S I A * JSC INVESTMENT: S&P Lowers Junk Ratings Further, Down to "D" * S W E D E N * ICON MEDIALAB: Reports Q1 2002 Financial Results LM ERICSSON: Bond Prices Dive Due to Ambiguity in Rights Issue * S W I T Z E R L A N D * ABB LTD.: Adds Low-margin Building Systems Unit in Disposal List * U N I T E D K I N G D O M * BRITISH AIRWAYS: Cuts 12 Routes, 500 Jobs in Latest Shake-up BRITISH TELECOM: Negotiates Possible Partnership With AOL CONSIGNIA: Workers to Strike If Pay Hike Remains Unresolved CORUS GROUP: Shakes up Board, Names New Director, Vice-Chairman EQUITABLE LIFE: Files 2nd Suit, This Time Targeting Ex-directors ITV DIGITAL: Shareholders Ask Carlton, Granada Chiefs to Resign ITV DIGITAL: Analysts See Liquidation on Horizon, Not Buyers MARCONI PLC: Secures GBP 10MM Contract From BT Wholesale RAILTRACK PLC: Tory MP to Examine Network Rail Financing NTL INCORPORATED: Continues Talks on Re-capitalization SPICES FINANCE: Fitch Downgrades Notes to CCC+ From BB- ============= B E L G I U M ============= GIB SA: Opts for Liquidation of Holdings Due to Bleak Future ------------------------------------------------------------ Belgian retailer and restaurateur GIB S.A. is going to hold an extraordinary general meeting on June 19 to formalize its decision to liquidate the company. AFX News says the firm has opted for liquidation because it on longer finds any opportunity for the company. The report says the firm sees little economic justification for a holding company with a diversified profile because of the traditional discount to share valuation of such companies and low stock market capitalization. The company holds interest in Quick, Lunch Garden, Gecotec, Disport and Exki. The report says the firm will no longer pay additional dividends, apart from the interim EUR6 released on December 6. The company says Quick Restaurants, a listed company in which GIB holds 57.8%, will continue operations, while Lunch Garden, Exki and Gecotec will operate until buyers are found. The agreements with the existing partners in Disport, on the other hand, will continue as planned. The Belgian firm hopes to appoint liquidators during the meeting in June. The liquidators will be responsible for redistributing the cash that will be generated from the proceedings. GIB's pro forma balance sheet for the quarter ending March 31 showed investments of EUR61.8 million, a subordinated loan of EUR33.5 million to Quick, net cash of EUR1.372 billion, shareholders equity of EUR1.227 billion and provisions for liabilities and charges of EUR145.5 million, bringing total assets and liabilities to EUR1.372.6 billion, the report says. ============= F I N L A N D ============= SONERA CORPORATION: Sells Primatel Ltd Stake to YIT for EUR41.6MM ----------------------------------------------------------------- Sonera Corporation has signed an agreement to sell the entire share capital of its subsidiary Primatel Ltd to another Finnish telecommunications network group YIT Corporation. The final selling prince is EUR 41.6 million less the amount of actual net debt on the closing date of the transaction. The consideration will be paid in cash. The closing of the transaction is subject to the approval of the competition authorities. The sale is expected to be completed by the end of the second quarter of 2002. Primatel Ltd, which started its operations as Sonera's subsidiary on July 1, 1999, provides telecommunications network construction and maintenance services. Sonera Corporation sells the share capital of Primatel, as network construction and maintenance are not part of Sonera's core business. "Network construction and maintenance are undergoing major changes. Operators are abandoning this business, and equipment manufacturers are using more and more subcontractors. "We believe that the transaction will further improve the competitiveness of the quality and prices of Primatel's services. At the same time, the transaction gives Primatel an opportunity to develop into a stronger player in its line of business," says Aimo Eloholma, Sonera's Deputy CEO. About 1,700 Primatel employees will transfer to YIT. The company's head office will be transferred from Kuopio to the premises of YIT-Corporation's head office in Helsinki. Hannu Leinonen will continue as Primatel's managing director. As a result of the transaction, Sonera Telecom Ltd's revenues will decrease by about EUR54 million (in 2001, Sonera Telecom Ltd's revenues were EUR 1,024 million). The transaction has a positive effect on Sonera Telecom Ltd's EBITDA (in 2001, Sonera Telecom Ltd's EBITDA margin was 22.6 %). The YIT Group provides total service for construction and industry. The company offers residential, property, infrastructure and industrial investment and maintenance services. In 2001, YIT's net sales amounted to EUR1.6 billion and operating profit was EUR99.7 million. At the end of March 2002, the number of personnel was about 10,700. Sonera Corporation provides mobile and advanced telecommunications services and offers transaction and content services in Finland and in selected international markets. The company also advises on advanced data solutions to businesses and fixed network voice services in Finland and neighboring markets. In 2001, Sonera's revenues totaled EUR 2.2 billion, and profit before extraordinary items and taxes was EUR 450 million. Sonera employs about 9,000 people. For further information at Sonera, please contact: Aimo Eloholma, Deputy CEO, Sonera Corporation Tel.: +358 2040 58700 E-mail: aimo.eloholma@sonera.com For further information at YIT, please contact: Reino Hanhinen, Group CEO, YIT Corporation Tel. +358 20 433 2454 E-mail: reino.hanhinen@yit.fi =========== F R A N C E =========== LVMH: Luxury Goods Group's 2002 First-Quarter Sales Increase 8% --------------------------------------------------------------- LVMH Moet Hennessy Louis Vuitton, the world's leading luxury product group, today announced that consolidated sales in the first quarter of 2002 reached a record EUR2,955 million, an increase of 8% compared to the first quarter of 2001, which had itself increased by 12%. The increase in LVMH sales reflects the excellent performances of the Group brands in an environment made difficult by the continued sluggishness in travel retail. Sales were particularly strong in Wines & Spirits and Fashion & Leather as market share was increased in both sectors. DFS sales were better than expected. On a divisional basis, sales were as follows: In millions of Euros 2002 2001 Change Wines & Spirits 457 384 +19 % Fashion & Leather 1 087 891 +22 % Perfumes & Cosmetics 495 506 - Watches & Jewelry 122 121 - Selective Distribution 781 824 -5 % Other activities 13 19 na Total 2 955 2 745 +8 % LVMH maintains the objective of achieving a significant rebound in operating income in 2002. LVMH Moet Hennessy Louis Vuitton is represented in Wines and Spirits by a portfolio of brands that includes Moet & Chandon, Dom Perignon, Veuve Clicquot Ponsardin, Krug, Pommery, Chateau d'Yquem, Chandon, Hennessy and Hine. Its Fashion and Leather Goods division includes Louis Vuitton, the world's leading luxury brand, as well as Celine, Loewe, Kenzo, Givenchy, Christian Lacroix, Thomas Pink, Fendi and Pucci. In addition, LVMH recently finalized the acquisition of Donna Karan, the legendary American brand. LVMH is present in the Perfumes and Cosmetics sector with Parfums Christian Dior, Guerlain, Givenchy, Kenzo, and six promising cosmetic companies, Bliss, Hard Candy, BeneFit Cosmetics, Urban Decay, Make Up For Ever and Fresh. LVMH is active in selective retailing through DFS, Miami Cruiseline, Sephora, Le Bon Marche and La Samaritaine. In 2000, LVMH launched eLUXURY, the authoritative online source for luxury goods on the Internet. LVMH's Watch and Jewelry division comprises TAG Heuer, Ebel, Chaumet, Zenith, Fred, as well as Omas, the prestigious Italian writing instruments company. LVMH shares are listed on the Paris Stock Exchange and NASDAQ in the United States. CONTACT: Analysts and Investors: LVMH Chris Hollis + 33 1 44 13 21 22 Media: France:DGM Michel Calzaroni /Olivier Labesse + 33 1 40 70 11 89 UK: Financial Dynamics Alison Allfrey + 44 207 831 31 13 Italy: Financial press D & C Financial Communications Fabio Raineri / Paola Di Raimondo + 39 02 438 11 41 US: Kekst and Company James Fingeroth / Molly Morse +1 212 521 48 00 LVMH: Completes Pommery Brand Sale to Vranken Monopole ------------------------------------------------------ LVMH, Moet Hennessy Louis Vuitton, the world's leading luxury product group, announced in a statement yesterday the completion of its sale of the Pommery champagne brand to the Vranken Monopole group. The sale comprises the Pommery brand, its site in Reims, its cellars, its champagne stocks and its supply contracts. LVMH will retain the vast majority of the Pommery vineyards, which are amongst the best "crus" in the Champagne region and a strategic asset for the Group. Christophe Navarre, President of the Group's wines and spirits division, said: "This sale results from LVMH's desire to concentrate on its star brands and underlines a determination for the Wines & Spirits division to focus its resources on its premium brands, which have strong potential." The strong growth seen in the first quarter of 2002 from all of the Group's brands (Dom Perignon, Moet & Chandon, Veuve Clicquot, Mercier, Ruinart, Krug, Canard Duchene and Hennessy) shows that this strategy is already bearing fruit. Though LVMH gave no sum for the transaction, Vranken chairman Paul-Francois Vranken, at a news conference in Paris, said the acquisition price range is "between EUR150 million and EUR18 million." MONTPARNASSE MULTIMEDIA: Multimedia Takes Over Software Maker ------------------------------------------------------------- Interactive CDRoms firm Mindscape hopes to make a comeback in the French market with the acquisition of Montparnasse Multimedia, the software maker placed in receivership recently. The company is eyeing to make a good return for the acquisition cost of the company, which generates turnovers of EUR40 million a year. Montparnasse is famous for its Louvre museum and palace of Versailles, two of its popular children's interactive software. The software maker collapsed after an unsuccessful attempt to branch out into the Internet, La Tribune says. Mindscape hopes to up its 40% market presence in France with the acquisition. The report did not state how much Multimedia paid for Montparnasse. ============= G E R M A N Y ============= COMMERZBANK: To Shake up Units to Become Leader in Evolving Trend ----------------------------------------------------------------- Germany's third-largest listed bank Commerzbank is revamping its operations to better position itself in the changing look of corporate Germany. According to the Financial Times, the bank anticipates that the core focus for bankers in the next few years would be "corporate risk and restructuring" due to the recent collapse of several corporations in Germany. To become the leader in this evolving market trend, the bank plans to integrate further its capital market and commercial lending businesses. Executives say the aim of the revamp will be to focus the investment bank on distributing higher margin derivative and structured products to Commerzbank's corporate and retail clients. In an interview with the Financial Times, Mehmet Dalman, head of investment banking, says Commerzbank, in reshaping its operations, merely wants to exploit its expertise in derivatives, securities and corporate lending in order to become a leading player in the long overdue restructuring of corporate Germany. He says the bank wants to position the investment bank as a "risk platform" and a "risk intermediary" between corporate clients on the one side and institutional investors, hedge funds and retail investors on the other. The bank expects the strategy to transform the investment-banking arm into a profitable business that would offer corporate and institutional clients a full spectrum of products and services. Mr. Dalman says a specialist investment bank, which Commerzbank hopes to become, with a regional focus on Europe but could service clients elsewhere could generate revenues of about EUR2 billion a year. Executives told the paper that the plan gives the bank "a clear sense of direction" at a time when the bank as a whole is on the defensive. "We need a mission - the headhunters are circling," one executive told the Financial Times. FAIRCHILD DORNIER: Needs Written Affirmation of China Deal ---------------------------------------------------------- Insolvent regional plane-maker Fairchild Dornier is hoping that the Chinese government will soon provide written confirmation of a verbal agreement to import eight of its 328 jets. According to Die Welt, the order will significantly boost the firm's sagging finances, which recently absorbed a staggering blow with the pull out of an order for 50 birds by Gecas, a unit of General Electric. That contract was worth about US$1.4 billion and had contained an option for another 100 planes. An A328JET is priced at US$13 million, the report says. Concrete details over how much the company will actually get from the transaction have yet to be published. The report says Chinese carrier Hainan Airline wants to order a total of 21 aircraft of the 328-type. HERLITZ AG: Three European Competitors Vie for Spoils ----------------------------------------------------- Around three companies are reportedly courting the administrator of stationary and office supplies maker Herlitz AG, but a sale is still farfetched because 70% of the company is still in the hands of creditor banks. According to Frankfurter Allgemeine Zeitung, the suitors include the company's rivals within Europe. The paper did not identify them. The company's operation is secured until the end of July due to a EUR15 million bridging loan extended recently by a consortium of 11 creditor banks. SOFTWARE AG: Q1 Losses Unprecedented, 2002 Prospects Uncertain -------------------------------------------------------------- Europe's biggest vendor of systems software for data management Software AG posted recently huge sales drops in the first quarter, forcing it to admit that its prospects for 2002 is uncertain. Sales of the firm's traditional products Adabas and Natural dropped to EUR14.7 million euros in the first quarter from EUR25.7 million a year earlier, says Reuters. Its new electronic business products also absorbed a substantial sales dive, from EUR13.3 million a year earlier to only EUR6.2 million in the first quarter. Sales of Entire-X, the so-called "middleware" product that enables different software systems to work together, also fell to EUR3.6 million from EUR6.9 million. "A number of major deals that were expected to close in March 2002 were postponed at the last minute, even by long-standing customers," board member Andreas Zeitler said in a statement. "This was a phenomenon we have never experienced to this extent," Mr. Zeitler said. The company does foresee a recovery soon, even if the market expects a rebound by the second half of the year. "It is still not clear if the economy will demonstrate the frequently quoted pick-up in the second half of 2002 and what effects such a recovery would have on the information technology sector," the company said in a statement. According to the news agency, the company, which has already issued two profit warnings this year, has adjusted its full-year forecasts, which now expects a 10% drop in overall sales. Net profit for 2002 is also expected to fall short of the EUR38.7 million recorded last year. By how much this drop will be, the company doesn't know. EBITDA in the first quarter was, however, up at EUR3.6 million from EUR1.3 million a year earlier, but net losses widened to EUR2.4 million from only EUR1.5 million for the same period last year. TV.BERLIN: Kirch Empire Takes 2nd Blow With Channel's Insolvency ---------------------------------------------------------------- Local television channel TV.Berlin became the second casualty of the financial woes at KirchGruppe, following KirchMedia to the bankruptcy court early this week. According to AFX News, this channel is owned by Thomas Kirch, son of KirchGruppe founder Leo Kirch. The channel employs 100 full- time workers. The report says the station will continue to broadcast while it finds new partners. The younger Kirch also owns TV Muenchen in Munich and Hamburg 1, aside from TV.Berlin. All three are loss-making the news outfit says. Accordingly, Bernd Schumacher, an operator of two regional broadcasters in the state of Baden-Wuerttemberg, approached the Mr. Kirch last month to begin negotiations to buy the three TV stations. It is not certain whether the young entrepreneur will step up talks with Mr. Schumacher now that TV.Berlin has only three months device an exit plan from insolvency. The other option he has is to liquidate the asset. ============= I R E L A N D ============= ALLIED IRISH: Drops PricewaterhouseCoopers, to Hire New Auditor --------------------------------------------------------------- Allied Irish Banks has put its external auditing work up for grabs by other accounting firms, dropping its former auditor PricewaterhouseCoopers, the Telegraph reported yesterday. The paper said the ex-auditor won't participate on the tender process. The move to drop PricewaterhouseCoopers is surprising, as the bank had earlier refused to blame the firm for the US$691 million that disappeared at Allfirst. A probe known as "The Ludwig Report" concluded last month that the losses racked up by foreign exchange trader John Rusnak were due to AIB's flawed controls system and that the trader had been inadequately supervised. AIB said the decision was taken by the board "in the context of a number of other actions and changes already announced as part of the review of control processes currently underway." The former auditor collected GBP1.5 million for its work on the 2000 books. ===================== N E T H E R L A N D S ===================== KPNQWEST NV: Hires Bear Stearns to Improve Its Balance Sheet ------------------------------------------------------------ Struggling data communications venture KPNQwest N.V. has lowered its revenue and EBITDA forecasts for 2002 due to the deteriorating market outlook, says Reuters. Earlier, the company set the bar for annual revenues at EUR1.3 billion. It now expects actual figures to settle between EUR1 billion and EUR1.05 billion. EBITDA is also expected to reach EUR140 million only, down from the previous estimate of EUR175 million. The Dutch company said it has retained investment bank Bear Stearns & Co. to help reorganize its balance sheet by raising additional capital, selling non-strategic assets and re- capitalizing the company's coffers. The re-capitalization plan, however, could lead to the nonpayment of interest on the company's high-yield indebtedness, the report says. Reuters says there are fears that the company will join its industry peers in proposing a highly dilutive debt restructuring. Last week, Credit Suisse First Boston released a study that projected the company to run out of money by the end of 2003. That study also confirmed an analysis of Morgan Stanley, which expects KPNQwest to have "a funding gap of EUR50 million to EUR175 million in the 2003-2004 timeframe." =========== P O L A N D =========== ELEKTRIM SA: Subsidiary Files Bankruptcy Petition in Warsaw ----------------------------------------------------------- The Management Board of energy and telecoms conglomerate Elektrim S.A. announced Tuesday that the Management Board of company VPN Service Sp. z o.o., based in Warsaw, (98% subsidiary of Elektrim S.A.) filed a petition for the declaration of bankruptcy of VPN Service Sp. z o.o. in the Warsaw District Court, Commercial Court, XVII Economic Division. ELEKTRIM SA: Validity of Ruling to Discontinue Proceedings ---------------------------------------------------------- The Management Board of Elektrim S.A. announces that the Court's decision with regard to discontinuing the composition proceeding will become final and valid 7 days of the announcement of the decision, i.e. on April 30, 2002. The Company's Management Board is considering lodging a complaint against the decision pursuant to the regulations in force. =========== R U S S I A =========== JSC INVESTMENT: S&P Lowers Junk Ratings Further, Down to "D" ------------------------------------------------------------ The failure of JSC Investment Banking Corporation to meet its maturing inter-bank obligations in Russia forced Standard & Poor's to lower two ratings of the banks Tuesday. The bank's long- and short-term counterparty credit rating dropped to "D" from "CCC-" as a result of the ratings action. The certificate of deposit ratings of the bank also suffered the same downgrade from "C." The ratings agency said the revised grades reflect the bank's significant single-party concentrations in loans, market risks in second-tier vessels, highly concentrated deposits, low profitability, and weak market position. "The central bank of Russia is conducting an extraordinary audit to determine the financial situation of IBC," Scott Bugie, managing director at Standard & Poor's Financial Services Group in Paris, also noted. For more information, contact Scott Bugie, Paris (33) 1-4420-6680 or Irina Penkina, Moscow (7) 095-787-4564 You may also e-mail them at these addresses: scott_bugie@standardandpoors.com irina_penkina@standardandpoors.com FIG_Europe@standardandpoors.com =========== S W E D E N =========== ICON MEDIALAB: Reports Q1 2002 Financial Results ------------------------------------------------ Icon Medialab International AB, the parent company of the e- business and IT services company IconMedialab/Lost Boys, bared recently the financial results for its first quarter 2002 ended March 31, 2002. In the past three months, the company has in particular worked to develop and initiate the execution of its previously announced Action Plan. As part of this plan the company is putting focus on key markets to serve its clients most effectively and ensure an improved financial performance. As part of the plan, it has also started to exit from markets designated as "non key". This is the first report of consolidated accounts of the merged company, which became effective 18 January 2002. For the first quarter 2002 the Group reported net sales of SEK 224.1 million, of which SEK 54.3 million was contributed by former Lost Boys Group units, which were included as of the date of the transaction. The reported net sales are 48 % below the first quarter of the prior year level, and increased by 8 % from the fourth quarter 2001. The company reported an operating loss, before goodwill amortization and one-time items, of SEK -102.2 million. In addition, a restructuring provision recorded in the first quarter 2002 amounts to SEK 89.5 million, which is an increase of SEK 14.5 million from the one-time costs previously identified for the Action Plan. This increase results from more closely considering the steps necessary in executing some plan elements. In addition to the restructuring provision recorded, there will be a negative effect of approximately SEK 25 million on the Group's net equity and income statement from the discontinuation of certain subsidiaries. The ongoing fully underwritten Rights Issue of approximately SEK 173 million, net of issue costs, will greatly strengthen the Group's liquidity and equity/asset ratio. Net proceeds from the Rights Issue are expected to be approximately SEK 82 million, in addition to which approximately SEK 35 million of the loan facility from major shareholder Red Valley Ltd has not yet been utilized. "The company is making good progress to reach its operational targets within the timeframe that we announced earlier this year", says Robert Pickering, Acting CEO of IconMedialab/LostBoys. "Looking at the swift implementation of the action plan, and the improved performance in our key markets, particularly the United States, the Netherlands, Italy and Spain, I am confident we will reach our target". The earlier announced reduction of 350 staff is on target and will be finalized by the middle of the second quarter. An important part of this process is the company's new focus on the key regions that are expected to contribute the most to the performance of the company. These regions include home markets Sweden and The Netherlands, Germany, Italy, Spain/Portugal, Belgium, Finland, Denmark and the United States. "These markets show the best basis for our future, looking at the current and expected business we have there. With this network of offices, we are in a good position to carry out our strategy of multi-national presence in order to service cross border clients. This remains a tremendous USP for our company, compared to competitors", commented Robert Pickering. The Board has decided not to fund certain subsidiaries, which means the company will restructure or consolidate, or ultimately exit some markets. This in particular applies to our operations in the United Kingdom, Switzerland and Poland. As previously announced the company sold its business in Norway to WM-data. The Group will continue to evaluate the markets in France and Stockholm, Sweden. It has decided to exit its Malmo and Gothenborg offices in Sweden. In the Netherlands, the integration of the various groups is in the process of completion. All redundancies are included in the earlier announced figure of 350. By the end of Q2, the company will employ some 1150 people. Net sales for the first quarter were SEK 224.1 million, which is 48% below the same quarter in the prior year. The operating earnings before goodwill amortization were a loss of SEK 191.8 million in the quarter compared to a loss of SEK 178.4 million in the first quarter of 2001. Operating earnings after goodwill amortization were a loss of SEK 208.3 million for the quarter, an improvement by SEK 25.5 million from the prior year. Net sales increased by 8% from the fourth quarter 2001, while the operating loss excluding one-time charges deteriorated by SEK 7 million from the fourth quarter 2001 to the first quarter 2002. The following table illustrates trends in quarterly performance from first quarter 2000 and onwards. The following table displays the geographical distribution of net sales for the first quarter and the year 2002, compared with the same period prior year. Net sales outside of Sweden comprise 88 % of total net sales for the first quarter 2002, in comparison to 72 % in 2001. Quarterly sales in Sweden declined 78% compared to the same period last year, while revenue in Europe and North America decreased by 44 % and 22 % respectively. As of March 31, 2002, shareholders' equity totaled SEK 107 million, compared to SEK 110 million on December 31, 2001. Trade receivables as of March 31, 2002 totaled SEK 192 million representing approximately 67 days sales outstanding, a deterioration of 2 days from the end of the fourth quarter 2001 position. Liquid assets on March 31, 2002 totaled SEK 110 million, compared to SEK 69 million as of December 31, 2001. Earnings per share after tax on a non-diluted basis were a loss of SEK 2.21 for the first quarter 2002 compared to a loss of SEK 4.56 for the same period 2001. At the end of the period, shareholders' equity per share on a non-diluted basis was SEK 1.03, compared to SEK 13.44 March 31, 2001. The parent company had 103,949,433 outstanding shares (including paid but not yet registered) as of March 31. On a fully diluted basis, including all outstanding options, the maximum number of shares was 124,979,508 as of that date. The parent company recorded net sales, including management fees, of SEK 11.9 million for the first quarter, and a net loss of SEK 1.4 million. No investments were recorded in 2002. As of March 31, 2002, the parent company recorded liquid assets of SEK 17.3 million. The company will announce its second quarter 2002 results on July 31, 2002 and its third quarter 2001 results on October 29, 2002. IconMedialab and Lost Boys merged in January 2002 to become one of the world-leading IT professional service providers. The group operates with 1400 employees in 14 countries throughout Europe and the US. The group provides user-driven solutions through innovative technology for all digital channels - with a global reach and local expertise. The group focuses on six industries: financial services, pharmaceutical and healthcare, manufacturing, retail, media and telecom and has developed solutions for a broad range of clients The company's stock is traded on the Stockholm Stock Exchange O- list (ICON). For more information: www.iconmedialab.com and www.lostboys.com The full Interim Report including tables is available to download from: http://bankrupt.com/misc/Q1-02-Eng_Final.pdf. LM ERICSSON: Bond Prices Dive Due to Ambiguity in Rights Issue -------------------------------------------------------------- The lack of details on Ericsson's SEK30 billion rights issue and the uncertainty between now and the third quarter when the transaction will be executed has sent the company's bond on a downward spiral. Since Monday when prices dropped by a record 24% to SEK27.3, the spreads on Ericsson's benchmark bonds have widened by 40 basis points, the Financial Times says. On Wednesday, these bonds were trading at SEK24. Normally the announcement of a rights issue pushes the value of debt, but in the case of Ericsson, the uncertainty of the company's future and the threat of a ratings downgrade are making investors uneasy. Moody's and Standard & Poor's recently said they were reviewing Ericsson's ratings, due to the its weak performance and a deeper decline than expected in order booking in the first quarter of this year. "Bond investors are not terribly convinced about the success of the rights issue and believe that Ericsson needs ongoing positive cash-flows in addition to an improved balanced sheet to stay investment grade," Banc of America analyst Peter Din told the Financial Times. The paper says, although Ericsson has appointed financial advisers for the rights issue, the only detail they have heard so far about the transaction is that it will be done by the end of the third quarter. Investors believe this is a lot of time for uncertainty. ===================== S W I T Z E R L A N D ===================== ABB LTD.: Adds Low-margin Building Systems Unit in Disposal List ---------------------------------------------------------------- ABB Ltd., which recently experienced short-term liquidity problems, has added to its asset disposal list the building systems business to ensure the achievement of its debt-reduction goals for the year. The unit accounts for more than 10% of the company's revenues, but it is more labor intensive, employing 18,000 staff. In explaining the decision to the Financial Times, CEO Jurgen Centerman said the move is sort of a gamble, which if successful, will double his group's margins by 2005. He says the company wants to focus on smaller but higher-margin businesses concentrating on power and automation technology. "We want to build businesses where you can grow volumes without necessarily having to grow the resources at the same pace," Mr. Centerman told the Financial Times. The company has yet to attach a price tag for the building systems unit. Only recently, the Swiss-Swedish engineering group also announced the sale of its structured finance unit after successfully re- negotiating a US$3 billion banking facility. The company needs to reduce debts by US$1.5 billion this year as part of its agreement with banks for the renewal of the lifeline. =========================== U N I T E D K I N G D O M =========================== BRITISH AIRWAYS: Cuts 12 Routes, 500 Jobs in Latest Shake-up ------------------------------------------------------------ Slumping British Airways is stopping 12 routes in its U.K. regional operations and cut a further 500 jobs as part of its ongoing restructuring to return to profitability. The Financial Times says the move will affect the four flights out of the city of Cardiff to Dublin, Edinburgh, Glasgow and Newcastle. Also to be eliminated are the services from Bristol to Brussels and Cork, from Plymouth to Cork and Dublin, and from Southampton to Frankfurt, Jersey to Paris, Newcastle to Cork and Belfast to Sheffield. The paper says the airlines aims to reduce overall capacity from UK regional airports by eight percent and make annual cost savings of GBP20 million (US$28.9 million) by 2004. By cutting said routes, the carrier also expects to boost its other key regional business routes, by increasing frequencies on nine services out of Manchester, Bristol and Newcastle. It also plans to open new routes from Manchester to Venice and Bristol to Leeds-Bradford. Later this year, it is expected that the carrier will complete the consolidation process of its regional operations. The aim is to simplify the regional fleet. Meanwhile, the airline says the 500 redundancies is still part of the 13,000 job-cut announced last August. The company says it hopes to save GBP650 million by March 2004. The company says it is aiming to slash the workforce of its regional operations by 2004 by around 20 percent or 700 jobs from 3,500 to 2,800. BRITISH TELECOM: Negotiates Possible Partnership With AOL --------------------------------------------------------- BT Group plc said Wednesday the struggling company is discussing with AOL, the U.S. Internet service provider, regarding a potential broadband partnership. Angus Porter, managing director of BT's retail arm, however, expressed the practical hurdles that may come against its plans. Porter said a partnership with AOL could be obstructed by regulators. The company also needs to resolve a technical issue when it wants to link with AOL's "unique platform," he said. CONSIGNIA: Workers to Strike If Pay Hike Remains Unresolved ----------------------------------------------------------- Consignia will hold a dialogue with postal workers next week to try to avert a strike threatened by the Communications Workers Union for May 8. According to BBC News, if it goes ahead, the strike will be the first industrial action to be held by the postal workers since 1996. The row between the two camps revolves around the 6.9% pay hike offered by Consignia to its workers. The union does not like the offer because 2.2% of the increase covered agreement over changes to delivery patterns. The union is proposing a 4.7% hike, with the extra payments for new delivery patterns to be negotiated. The workers association insists a pay rise for change in delivery patterns should be dealt with separately. Consignia has been hit by falling revenue due to increased use of e-mail and by the end of its monopoly on postal delivery services in the U.K. Consignia lost GBP1.5 million a day during the six months to November last year and announced 15,000 job cuts in March as part of a three-year plan to restructure the business. CORUS GROUP: Shakes up Board, Names New Director, Vice-Chairman --------------------------------------------------------------- Corus Group plc announced on a statement Tuesday that Dr. A Hayward was appointed a non-executive director of the company with effect from April 22, 2002. Dr. Hayward is Group Vice President, Finance of BP plc. Mr. H. de Ruiter, Sir Nicholas Goodison and Mr. A. A. Loudon are no longer directors of the company following the Annual General Meeting held on April 22, 2002 when they retired from the Board. Mr. J. W. Leng was appointed deputy chairman and the senior independent director. EQUITABLE LIFE: Files 2nd Suit, This Time Targeting Ex-directors ---------------------------------------------------------------- Equitable Life is not yet through with its crusade to let those responsible for its collapse pay. After last week's announcement to sue Ernst & Young for GBP2.9 billion, the insurer also bared this week that it's going after 15 former directors of the society. The company said it intends to collect GBP3 billion from the former executives for failing in their duty from 1993 to 2000, the period when the board reneged on its promises to holders of guaranteed annuity policies that eventually led to its collapse. A ruling by the House of Lords, forcing the insurer to honor those pledges cost the company GBP1.5 billion. The liability opened a big hole on its with-profits fund, forcing it to close to new business, The Times said. The company claims that the directors failed to obtain legal advice on the policy of paying lower bonuses to policyholders with guarantees. In addition, they also failed to act on the advice that Equitable might lose and make adequate financial provision, once the court case on annuities was under way. According to The Times, the directors to be named in the lawsuit include Jennie Page, the original chief executive of the New Millennium Dome Experience and a former director of Railtrack, and Peter Sedgwick, the current Schroders chairman. Peter Davis, former director-general of the National Lottery; John Sclater, president of the society during the court case and current chairman of Foreign & Colonial Investment Trust; and Alan Nash, who from 1997 combined the roles of managing director and actuary, are also expected to be indicted. "The actions or inactions of these former directors caused many policyholders substantial loss of benefits," Incumbent Equitable Chairman Vanni Treves told The Times. Policyholders welcomed the suit, even as they prepare to sue Equitable itself. "After all the sleepless nights for policyholders at least now the directors are beginning to feel uncomfortable. They sailed off, and have never once said they are sorry for the mess they left behind," Liz Kwantes told The Times. She is a member of Equitable Life Members' Help Group. Allen & Overy, the City law firm that will represent nine of the non-executive Equitable directors, told the paper it will defend the clients with "utmost vigor." The report says any compensation from the directors and the auditors would be paid into Equitable's with-profits fund. Despite a compromise deal ratified earlier this year, designed to stabilize its finances, the with-profits fund is still extremely weak. ITV DIGITAL: Shareholders Ask Carlton, Granada Chiefs to Resign --------------------------------------------------------------- Shareholders of Carlton and Granada, co-owners of ITV Digital, on Tuesday urged the owners of the two companies to step down for squandering GBP600 million a piece in the failed venture. The Telegraph did not name the shareholders, but said that calls for resignation for Carlton's Michael Green and Granada's Charles Allen are increasing in number. The report says ITV Digital now has GBP500 million of debts, after Carlton and Granada swapped half for equity. Some believe the co-owners will face a bill of another GBP100 million each in redundancy and other costs if they shutdown the network. By the way, this is assuming that the two are not liable, as they claim, for ITV Digital's GBP315 million contract with the Football League. "There is a lot of shareholder upset. Apart from anything else, they have done a lot of damage to the ITV terrestrial brand," a major investor with a combined stake of tens of millions of pounds in Carlton and Granada told Telegraph. The two owners have yet to make a statement on the shareholders plea. ITV DIGITAL: Analysts See Liquidation on Horizon, Not Buyers ------------------------------------------------------------ City observers believe ITV Digital will be liquidated, as it is becoming doubtful administrator Deloitte & Touche will find a buyer for the troubled digital network. In interviews with The Guardian, several analysts say they don't expect an investor to come forward and rescue the firm. Thought earlier as a possible bidder, Stephen Grabiner, an ITV Digital ex-boss who is now with venture capital Apax Partners, have yet to confirm his intentions. Many believe he will stay that way. "This isn't a typical venture capital play. The risk feels high because digital terrestrial TV hasn't really worked anywhere. The reward looks to be capped by a combination of government intervention and a strong competitor in BSkyB," Robin Lincoln of private equity group Hg Capital told The Guardian. Analysts also dismissed speculations that the Football League could offer to buy the platform in partnership with another broadcaster. They believe no broadcaster would bite the bait even if the League sweetens the pot. ITV Digital boss Stuart Prebble has also been linked to a management buyout but colleagues think this isn't likely. The report says administrator Nick Dargan is in talks with the independent television commission to work on an interim plan that could see the BBC and BSkyB join forces to keep digital terrestrial TV broadcasting while liquidators find a buyer to take over the assets in the long term. But BSkyB has insisted it has no intention of acquiring the platform, the paper says. Meanwhile, ITV announced recently that it had secured foreign currency firm Travelex as sponsor for its World Cup programs. The company said Travelex paid GBP3 million or 25% less than Vauxhall for the 1998 competition. The firm explained the drop as due to the early morning kick-off for most games. "The games are not scheduled for prime time and the price reflects fair market value," a spokeswoman for Granada Enterprises, which brokered the deal, said. MARCONI PLC: Secures GBP 10MM Contract From BT Wholesale -------------------------------------------------------- Marconi, the beleaguered telecoms equipment manufacturer, said Tuesday it acquired a new GBP10 million contract by BT Wholesale to carry out an upgrade of its intelligent network (IN) platform. When completed, the program, which is expected to take 12 months, will increase the functionality of BT Wholesale's IN by demonstrating a new open interface (Parlay), through which third parties can develop innovative applications and services capable of being hosted on the Marconi IN platform or an independent Application Server. It will also demonstrate an ability to support Internet Protocol (IP) traffic in addition to the narrowband voice and data traffic which BT's IN currently handles. The platform supports a wide range of customer services, including "1471" and "ring back when free", as well as supporting virtual private networks for BT's medium-size corporate customers. A team of Marconi engineers at the company's Coventry site will work on the project, which also includes software development and systems support. "We have been upgrading the Marconi intelligent network on a regular basis since it was originally installed some five years ago," said Dave Fallen, Head of iNetwork Capability and Applications at BT Wholesale. "These platforms enable us to deliver exciting new services to our customers. This upgrade will allow us to continue to bring exciting, value-adding services to our customers and marks a first, flexible and tactical step towards evolving our intelligent network." Rod Smith, EVP of Marconi EMEA, said: "Every operator in the world wants to introduce new services for the benefit of its end user customers and its own revenue growth, while maximising the return on its previous investments. BT has been as innovative as any in this area with its "1471" and "Ring Back" services especially successful. "This upgrade will allow BT to consider new applications from a wide range of new third party developers where creativity abounds. Awarding the contract to Marconi further demonstrates that, despite recent challenges, we retain the ongoing support of our major customers." Delivery of the new intelligent network upgrade is scheduled for November of this year, with the deployment to be completed by March 2003. Marconi plc is a global telecommunications equipment and solutions company headquartered in London. The company's core business is the provision of innovative and reliable optical networks, broadband routing and switching and broadband access technologies and services. The company's customer base includes many of the world's largest telecommunications operators. The company is listed on both the London Stock Exchange and NASDAQ under the symbol MONI. RAILTRACK PLC: Tory MP to Examine Network Rail Financing -------------------------------------------------------- As Railtrack-bidder Network Rail struggles to convince banks to back a GBP9 billion bridging loan to help finance the exit of the firm from administration, an MP vowed recently he will scrutinize any off-balance-sheet government financing. Tory MP Edward Leigh, who heads the Public Accounts Committee, told the Telegraph recently that he will take a close look at any deal Network Rail and the Strategic Rail Authority will forge. Mr. Leigh vows to make sure that the Channel Tunnel Rail Link experience won't be repeated. This particular off-balance-sheet transaction cost taxpayers GBP80 million more than it would have entailed had it been a direct public investment. Network Rail is banking on the Authority to provide more guarantees to banks, which recently backed off from participating in the bridging loan due to insufficient loan cover. The previous terms of the proposed loan agreement only provided comfort that the taxpayer-backed Authority would provide "a package of standby loans which could be used in the last resort," such as in the event of cost overruns on maintaining or renewing the track. Network Rail managing director Iain Coucher Wednesday that the new terms now "contain information on binding contractual support from the [Authority]." It is not yet certain what measures Mr. Leigh will adopt should the new deal between Network Rail and the Authority would prove to be another Channel Tunnel-type of financing. He, however, said that he doesn't like any transaction that "may affect the principle of transparency" in public accounts. NTL INCORPORATED: Continues Talks on Re-capitalization ------------------------------------------------------ NTL Incorporated announced Thursday that contrary to press reports published yesterday regarding its re-capitalization process, it does not intend to file for Chapter 11 protection on or ahead of April 29. NTL stated that it believes that ongoing discussions with its creditors continue to be both constructive and positive toward reaching a successful agreement with all parties on a consensual basis. Consistent with its previously announced agreement in principle, the plan will allow NTL to reorganize and emerge stronger and healthier, without affecting its operations. The Company yesterday filed with the Securities and Exchange Commission a Form 8-K that included further details of its agreement in principle with bondholders. The agreement in principle contained various calculations that were based on the working assumption of an April 29 filing, but do not require a filing to occur at that time. The Company will provide an update on the progress of its negotiations as soon as material developments have been made. On April 16, NTL said that it had reached an agreement in principle with an unofficial committee of a majority of its public bondholders, to convert approximately US$10.6 billion in debt and receive US$500 million in new financing. NTL offers communications services to homes and business customers throughout the UK, Ireland, Switzerland, France, Germany and Sweden. In the UK, over 11 million homes are located within NTL's fibre- optic broadband network, which covers nearly 50% of the UK including, London, Manchester, Nottingham, Oxford, Cambridge, Cardiff, Glasgow and Belfast. NTL Home now serves around 3 million residential customers. NTL Business is a GBP600 million operation and customers include Royal Bank of Scotland, Tesco, Comet, AT&T and Orange. NTL offers a broad range of technologies and resources to provide complete multi-service solutions for businesses from large corporations to local companies. NTL Broadcast has a 47-year history in broadcast TV and radio transmission and helped pioneer the technologies of the digital age. Twenty two million homes watch ITV, C4 and C5 thanks to NTL's broadcast transmitters. With over 2,300 towers and other radio sites across the UK, NTL also provides a full range of wireless solutions for the mobile communications industry. Contact Information: For NTL Incorporated: U.S. Brunswick Group Media: Steve Lipin/Tim Payne, 212/333-3810; 917/853-0848 Analysts: Tamar Gerber, 212/906-8451 U.K. Media: Alison Kirkwood, 44-7788-186154 Mike Smith/Jonathan Glass, 44-207-404-5959 Analysts: Virginia McMullan, 44-207-909-21 SPICES FINANCE: Fitch Downgrades Notes to CCC+ From BB- ------------------------------------------------------- Fitch Ratings has downgraded Spices Finance Limited Series 2 (PEAS) notes to 'CCC+' from 'BB-' and removed the notes from Rating Watch Negative. The issuer, Spices Finance Limited, a special purpose vehicle incorporated with limited liability in Jersey, currently provides protection to Morgan Stanley on a US$323 million reference portfolio of 93 reference entities with a weighted-average credit quality equivalent to a 'BBB' rating using Fitch's rating factors. The reference portfolio amount has decreased from the initial US$330 million following credit events on Enron and Railtrack. Fitch's rating action results from the actual loss determinations on Enron and Railtrack. In particular, the valuation for Enron resulted in lower recoveries than the range indicated by initial market expectations. The reference portfolio has also seen significant deterioration as evidenced by the fact that the portfolio, initially all investment grade, now contains seven sub-investment grade names. The weighted-average Fitch Factor for the portfolio has increased from 12.98 in September 2001 when the deal was issued to 16.45 as of April 24, 2002. Fitch will closely monitor any changes to the existing portfolio and will take further action as required. Contact Information: Fitch Ratings Andrew Jackson, + 44 (0)20 7 417 6329 (London) Irina Kissina, +44 (0)20 7 417 6307 (London) Matt Burkhard, 212/908-0540 (Media Relations/New York) ************ 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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