/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/020513.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 Monday, May 13, 2002, Vol. 3, No. 93 Headlines * C Z E C H R E P U B L I C * KTP QUANTUM: Prosecutors Freeze Shares to Prevent Illegal Deals * F R A N C E * MOULINEX SA: Turkish Appliance Maker Goes Home With Brandt * G E R M A N Y * BAYERISCHE LANDESBANK: To Sell Assets as Profit Margin Sheds 75% DEUTSCHE TELEKOM: Will Not Write Down Any Asset Despite Slump ISION INTERNET: Energis Cuts Support, Necessitating Insolvency PHILIPP HOLZMANN: Dutch Group Heijmans NV Corners Three Units WELLE MOBEL: Declares Insolvency Due to Bank Credit Suspension * H U N G A R Y * MOL RT: Socialists Balk at Gas Unit Price Tag, to Oppose Deal * I R E L A N D * AIB: Fitch Affirm Ratings, Downgrades Allfirst Ratings * I T A L Y * ALITALIA SPA: Tour Unit Attracts 19 Interested Parties * N E T H E R L A N D S * VERSATEL TELECOM: Announces First-Quarter 2002 Results * P O L A N D * TELEKOMUNIKACJA POLSKA: PLN 350MM Fine Not Yet Reversed * R U S S I A * SIBUR INTERNATIONAL: Gives up Stake in BorsodChem Rt to Gazprom * S P A I N * JAZZTEL PLC: On the Verge of Collapse as Cash, Credit Dwindle JAZZTEL PLC: Notice of Annual General Meeting of Shareholders * S W E D E N * FRAMFAB AB: Reveals January 1 - March 31, 2002 Interim Report * U N I T E D K I N G D O M * BRITISH AIRWAYS: EasyJet to Take up Option on German Subsidiary CONSIGNIA: Industry Minister Admits Failed Talks With TPG EQUITABLE LIFE: CEO Thomson Admits Shaky Financial Footing INVENSYS PLC: Rexnord Sale Key to Getting Back Credibility ITV DIGITAL: Only Foreign Media Groups Are Interested in Licenses MARCONI PLC: No Rescue Plan Expected Along With Full-year Report NTL INCORPORATED: New NTL, Euroco Executives to Get Share Options NTL INCORPORATED: Consolidated Balance Sheet on December 31, 2001 NTL INCORPORATED: Background & Description of the Firm NTL INCORPORATED: Where to Get Additional Information P&O PRINCESS: Carnival Kept on "Watch Negative" Due to Merger Bid VERSAILLES: Lead Auditor Faces Fine, Suspension of License WESSEX WATER: Sale to YTL Assured With Bond-buyback's Completion XENOVA GROUP: Discloses First-Quarter 2002 Results =========================== C Z E C H R E P U B L I C ============================ KTP QUANTUM: Prosecutors Freeze Shares to Prevent Illegal Deals --------------------------------------------------------------- The client shares of bankrupt brokerage KTP Quantum have been frozen by state prosecutors in Prague due to suspicion that they could be subject to illegal dealing, the Prague Business Journal reported late last week. The receiver of the company also admitted that the clients are unlikely to get their money back because the value of the company's assets is now lower than the clients' deposits. Some 300 clients spearheaded by Orca Group petitioned a court in March to declare the company bankrupt after the company iced their accounts, which are worth CZK2 billion. According to a March report of the Troubled Company Reporter- Europe, the company also faces administrative proceedings by the Securities Commission, the country's equity markets watchdog. The Commission is threatening the company with a fine of up to CZK100 million and cancellation of its trading license for failing to withdraw its offer of a fixed return on investments and failing to give more information about shares in its portfolio. =========== F R A N C E =========== MOULINEX SA: Turkish Appliance Maker Goes Home With Brandt ---------------------------------------------------------- Turkish appliance maker Arcelik has successfully won the bid for Brandt, a division of Moulinex, which was put up for sale last year, Al-Bawaba reported last week. No financial terms were disclosed by the report. Arcelik is headquartered in Istanbul, where it is the largest private-sector industrial corporation. It manufactures refrigerators, washing machines, dishwashers, vacuum cleaners and air conditioners. Arcelik markets its products under the Beko and Arcelik brand names. The Turkish buyer is part of the Koc Group, the largest conglomerate in Turkey. The company exports one-third of the major appliances it produces, with 75% sent to EU-member countries. ============= G E R M A N Y ============= BAYERISCHE LANDESBANK: To Sell Assets as Profit Margin Sheds 75% ---------------------------------------------------------------- Bayerische Landesbank, Bavaria's main regional bank, is planning to auction some of its holdings after reporting last week a 75% drop in full-year pre-tax profits, says Handelsblatt. The bank's profit margin shrunk to EUR184 million in 2001 following the collapse of KirchGruppe, in which it has credit exposure of EUR2 billion. The bank is also exposed to Fairchild Dornier, Philipp Holzmann and Enron Corp. -- high-profile clients now undergoing bankruptcy procedures. Chairman Werner Schmidt refused to disclose which units or holdings will be placed on the block. He also did not say whether some foreign operations will be affected. The bank has units in Asia, North America and South Africa. It holds large stakes in charter airline Aero Lloyd, energy provider Thuga and construction company Walter Bau. Mr. Schmidt, however, clarified that no concrete sales negotiations are currently underway. The chairman says the bank will embark on a major strategy shift and aim for EUR1 billion profit by 2006. He said the bank will concentrate to a greater degree on its function as a central bank for Bavaria's public-sector savings-bank system, which maintains a 50% ownership of the bank. The state of Bavaria holds the other 50%. DEUTSCHE TELEKOM: Will Not Write Down Any Asset Despite Slump ------------------------------------------------------------- German telecom incumbent Deutsche Telekom is raising eyebrows within accounting circles, as it refuses to write down any of its assets that have now deteriorated, says the Financial Times. Although technically allowed, the move has surprised accountants, who see write downs as practically automatic during depressed economic conditions. As a result of this action, CEO Ron Sommer has relatively escaped criticisms compared with his industry counterparts, who have lately come under fire for taking huge charges, the paper says. Recently, Vivendi Universal Chairman Jean-Marie Messier drew the ire of shareholders when he booked a EUR15.7 billion charge. Analysts believe Deutsche Telekom should be writing off its US mobile units VoiceStream and Powertel due to the collapse of the value of wireless companies. Accordingly, these two units are now worth only US$5 billion to US$10 billion. The German telecom incumbent paid US$25 billion for the pair. The paper estimates that Deutsche Telekom could take as much as US$15 billion in charges for its weakened assets. But the company, in a preliminary report last month, insisted that it won't write down any asset, particularly those in the U.S. "VoiceStream is absolutely performing to our expectations," Deutsche Telekom said. ISION INTERNET: Energis Cuts Support, Necessitating Insolvency -------------------------------------------------------------- German unit Ision Internet AG says it will have to file for insolvency in the coming days, as it no longer has enough money to support operations after parent Energis abruptly cut financing recently. In a statement to the Frankfurt exchange late last week, the unit said Energis had "surprisingly" cut financial aid, constraining it to seek creditor protection, says Bloomberg. Bloomberg did state the reason for the surprised move, which ran contrary to Energis' pledge to support the German affiliate on its bid to avert bankruptcy. PHILIPP HOLZMANN: Dutch Group Heijmans NV Corners Three Units ------------------------------------------------------------- Dutch construction giant Heijmans NV is poised to snatch at least three units of Philipp Holzmann. German daily Handelsblatt confirmed from insolvency administrator Ottmar Hermann last week that the Dutch group has already signed a statement of intent constituting the sale. According to the paper, Heijmans NV will take over these three units: Dutch subsidiary Dubbers Malden BV, Hanover-based Franki Grundbau GmbH, and Holzmann's branch in Grafenwohr near Munich. Dubbers-Malden specializes in tunnels, bridges and civil engineering and employs 110 workers. It posts annual sales of around EUR30 million, says the paper. Civil engineering firm Franki, on the other hand, has 160 employees and generates annual sales of around EUR40 million. Active in servicing main customers in the U.S. military, the Grafenwohr unit employs 130 staff and posts annual sales of around EUR20 million, the report says. The sale is the first disposal of any Philipp Holzmann unit since the group declared insolvency in March. It is understood that the Dutch group is still interested in acquiring further parts, but it is unlikely that it will take over the entire domestic operations. WELLE MOBEL: Declares Insolvency Due to Bank Credit Suspension -------------------------------------------------------------- German office furniture manufacturer Welle Mobel GmbH revealed late last week that it applied for insolvency after two banks cancelled their credit lines. According to Frankfurter Allgemeine Zeitung, the collapse is due to fierce competition and restrained consumer spending amidst the economic meltdown. The company recently reported a double-figure reduction rate in turnover for the first quarter. The insolvency affects 900 employees, says the paper. All other subsidiaries of the Welle group are not affected by the filing. They are reportedly healthy and still generating profits. ============= H U N G A R Y ============= MOL RT: Socialists Balk at Gas Unit Price Tag, to Oppose Deal ------------------------------------------------------------- The new Socialist-led government of Hungary is opposed to the previous government's plan to buy the gas division of MOL Magyar Olaj- es Gazipari Rt for 300 billion forints, says the Budapest Business Journal. New Finance Minister-elect Csaba Laszlo said last week there is no more need to continue talks regarding the sale. The previous government of Prime Minister Viktor Orban had wanted to annex MOL's gas operations to ensure greater control over domestic gas prices. The company, on the other hand, willingly acceded to the sale as it had already lost US$800 million due to government's insistence to cap prices. The new government, however, thinks the price tag is too expensive and that the state intervention in this case is way too excessive. In the first nine months of 2001, MOL revealed losses of 14.29 billion forints ($51.6 million), while its gas division lost 111 billion forints. ============= I R E L A N D ============= AIB: Fitch Affirm Ratings, Downgrades Allfirst Ratings ------------------------------------------------------ Fitch Ratings has affirmed all the ratings of Allied Irish Banks following further discussions with management about the risk management issues arising from the fraud at Allfirst. The ratings are Long-term "AA-", Short-term "F1+", Individual "B" and Support "2". The Rating Outlook is Stable. Fitch has also removed from Rating Watch Negative the Long-term, Short-term and Individual ratings of Allfirst Financial Inc., Allfirst Financial Center and Allfirst Bank. These ratings had been placed on Negative Rating Watch following the announcement of the fraud at Allfirst. For all three entities, the Long-term ratings have been downgraded to "A+" from "AA-", the Short-term ratings to "F1" from "F1+" and the Individual to "B/C" from "B". The Support ratings have been affirmed at "3". The Rating Outlook is Stable. Fitch considers Allfirst's Tier 1 ratio to remain adequate at 7.5% at March 31, 2002, after the US$ 691MM loss, but the fraud and adverse publicity are likely to have some adverse effect upon Allfirst's standing and prospects. Allfirst, a U.S. retail and commercial bank based in Baltimore and with a leading market share in its region, is a wholly owned subsidiary of Allied Irish Banks, one of the two major Irish retail and commercial banks. ========= I T A L Y ========= ALITALIA SPA: Tour Unit Attracts 19 Interested Parties ------------------------------------------------------ The restructuring Alitalia SpA disclosed late last week that it has received 19 expressions of interest from medium-sized tour operators for its Italiatour SpA unit. The disposal of this unit is part of the carrier's ongoing restructuring, says Dow Jones Newswires. Deadline for submission of non-binding offers is June 10. Lazard is advising the struggling carrier on the sale. ===================== N E T H E R L A N D S ===================== VERSATEL TELECOM: Announces First-Quarter 2002 Results ------------------------------------------------------ Versatel Telecom International N.V., reported Monday its first- quarter financial and operating results. For the three months ending March 31, 2002 gross billings were EUR 75.1 million, up 2.3% compared with fourth quarter 2001 gross billings of EUR 73.5 million and up 21.7 % compared to gross billings of EUR 61.7 million in 1Q01. In Germany, gross billings for the first quarter of 2002 were EUR 25.9 million compared to EUR 23.4 million in 4Q01 and EUR 17.0 million in 1Q01. For more information on gross billings, please see the definition below. Revenues for the first quarter 2002 were EUR 67.5 million compared to revenues of EUR 65.9 million in 4Q01 and revenues of EUR 61.7 million in 1Q01. For the first quarter of 2002, on-net revenues were EUR 43.4 million compared to EUR 40.5 million in the fourth quarter of 2001 and EUR 34.1 million in the first quarter of 2001. This growth continues to reflect the increased provisioning of on-net fiber, DSL, and ISDN customers. Versatel's gross margin as a percentage of gross billings in the first quarter of 2002 was 41.5 % compared to 39.6 % in 4Q01 and 34.9 % in 1Q01. The increase in gross margin was primarily due to the continued migration of fixed network costs to Versatel's network and the increased focus on higher margin on-net customers. Chief Executive Officer, Raj Raithatha commented, "I am pleased to announce the sequential growth of our gross margins by approximately two percentage points during the first quarter 2002. This growth continues to be driven by our focus on provisioning on-net customers and improving the efficiency of our network. Although revenue growth continues to be modest, on-net revenues now represent over 64 % of total Versatel revenues." Selling, general and administrative expenses before non-cash stock based compensation and other non-recurring expenses (SG&A) for the first quarter of 2002 were EUR 34.9 million or 46.4 % of gross billings compared to EUR 38.5 million or 52.4 % of gross billings in 4Q01 and EUR 44.8 million or 72.6 % of gross billings in 1Q01. This decrease was primarily due to the rationalization of our business units in order to bring them in line with current market opportunities. During the first quarter 2002, Versatel recognized a non-cash stock based compensation net gain of EUR 2.7 million related to the amortization of deferred compensation and cancellation of granted employee stock options for employees who have since left the company. As of March 31, 2002, EUR 10.1 million of the EUR 11.2 restructuring reserve recognized in 2001 had been paid in cash and a total of 413 Versatel employees had been terminated. For the three months ended March 31, 2002, Versatel's adjusted earnings before interest, tax, depreciation and amortization, stock based compensation, tax penalties, and restructuring expenses (adjusted EBITDA) loss was EUR 3.7 million compared to a loss in 4Q01 of EUR 9.4 million and a EUR 23.3 million loss in 1Q01. Mark Lazar, Chief Financial Officer of Versatel, commented: "Profitability and cash flow generation continue to be the main focus of management. The EUR 5.8 million sequential adjusted EBITDA loss improvement is driven mainly by our ability to leverage our dense local asset base, our focus on customer profitability and targeted sales growth and the cost savings achieved from our organizational restructuring in 2001. Given all of the negative news in the global telecommunications market, I am pleased to say that we are on track to achieve our goal of turning EBITDA positive this year and are seeing strong operational improvements that will serve as a platform for future performance." The net loss in the first quarter of 2002 was EUR 84.8 million (EUR 73.1 million excluding a EUR 11.7 million non-cash loss for the fluctuation in the Euro/Dollar exchange rate that resulted in a book restatement of the Dollar denominated debt on Versatel's balance sheet) compared to a loss of EUR 104.9 million (EUR 91.4 million excluding a EUR 13.5 million non-cash loss for exchange rate fluctuations) in 4Q01 and a loss of EUR 131.2 million (EUR 93.7 million excluding a EUR 37.5 million non-cash loss for exchange rate fluctuations) in 1Q01. Versatel's capital expenditures for the first quarter of 2002 were EUR 17.2 million. In total, Versatel's free cash out flows for the first quarter of 2002 were EUR 89.1 million compared to EUR 83.1 million in 4Q01. As of March 31, 2002, Versatel had a negative working capital (excluding cash, cash equivalents, and marketable securities) of EUR 158.2 million compared to EUR 194.8 million in 4Q01 and EUR 191.0 million in 1Q01. This negative working capital position decreased during 1Q02 primarily as a result of the timing of vendor payments and is expected to decrease substantially during 2002. In the future, Versatel expects its working capital needs to increase as it evolves from a negative to a neutral or positive working capital balance. This is largely due to an expected increase in Versatel's revenues and a related increase in accounts receivable, at the same time that Versatel expects a significant reduction in its accounts payable as a result of payments made with respect to equipment and services purchased in connection with the construction of its now largely completed network. As of March 31, 2002, Versatel had EUR 633.6 million in cash, cash equivalents and marketable securities on its balance sheet. This month, Versatel will submit a quarterly report on Form 6-K to be filed with the U.S. Securities and Exchange Commission. Versatel Network Versatel connected 96 new buildings directly over its own fiber to the Versatel network during the first quarter 2002, compared to 173 in fourth quarter 2001. A slowdown in fiber connections is expected as we focus our fiber provisioning efforts on more complex connections and plan to provision lower-spend customers with bundled ISDN voice and dedicated Internet product over DSL. At the end of first quarter 2002, Versatel had 130 central offices (CO's) operational in The Netherlands and 285 operational in Germany. Through these CO's, Versatel added 1,134 DSL lines in the Benelux and 1,340 DSL and ISDN business lines in Germany, representing 4,051 total lines in the Benelux and 8,079 in Germany. Mr. Raithatha commented, "Our bundled voice and dedicated Internet product over DSL continues to be an integral part of our on-net strategy, serving as a compliment to our more complex fiber services for both the SME market and the larger corporate market. We launched several marketing initiatives during the first quarter 2002 and expect to realize the results of these efforts in the coming months." As of March 31, 2002, Versatel's local access extensions reached a total of 60 business park rings, 28 city rings and 76 near overlay sections. For the three months ended March 31, 2002, Versatel had approximately 1,554 km of local access extensions in the Benelux and 755 km in Germany for a total of 2,309 km. Other During the first quarter of 2002, Versatel added several large, well respected companies to our customer portfolio, including Bakkersland B.V., ECT B.V., Initial Varel Alarmcentraleservice B.V., Cooperatie Unive Verzekeringen, Van Wijnen Group N.V., Nationale Ombudsman, Co"peratie Hydron U.A., Welzorg Nederland N.V. and Simac ICT bv. Mr Raithatha commented, "With the turmoil in the telecommunications industry, many competitors have left our core markets of The Netherlands, Belgium and northwest Germany. This exodus has created an opportunity for Versatel to capitalize on the demand for advanced telecommunications services. In our core markets, given Versatel's extensive local access presence, we are able to compete favorably with the former monopoly telecommunications carriers and win or retain large corporate customers." On May 2, 2002, at a general meeting, Versatel's shareholders approved a proposed amendment of its articles of association to increase its authorized share capital and the issuance of additional shares and warrants in connection with Versatel's proposed financial restructuring. 2002 Financial Guidance Versatel previously announced 2002 financial guidance for gross billings, revenue, gross margin, adjusted EBITDA and capital expenditures in December 2001 and March 2002. Versatel would like to reiterate its guidance. The following statements are based on Versatel's current expectations. These statements are forward- looking and actual results may differ materially. Versatel believes 2002 will continue to provide a challenging operating environment. Specifically, Versatel anticipates an absolute decline in wholesale revenues as it shifts away from providing services to less financially stable operators and as more established operators scale back their business in its markets. Versatel believes that its focus on core retail local access products and services will allow it to continue to expand its gross margins. Also, Versatel expects that its cost rationalization program initiated at the beginning of 2001 will allow it to continue to reduce SG&A expenses, on an absolute basis and as a percentage of revenue, and will result in SG&A expenses in 2002 below 2001 levels. Given the difficult market conditions Versatel does not expect to generate positive adjusted EBITDA until the second half of 2002. Versatel expects gross billings for 2002 to increase to between EUR 300 million and EUR 315 million. Versatel expects revenues for 2002 to increase to between EUR 275 million and EUR 290 million. Versatel expects gross margin, as a percentage of gross billings, for 2002 to be between 41 and 43 %. Versatel also expects gross margin, as a percentage of revenues, for 2002 to be between 45 and 47 %. Versatel expects positive adjusted EBITDA for 2002 of between EUR 0 and EUR 5 million. Versatel expects capital expenditures in 2002 of between EUR 75 million and EUR 100 million. Without taking into consideration the revised terms of the financial restructuring announced on March 21, 2002 and any cash that would be used to complete the transaction, Versatel's balances of cash, cash equivalents and marketable securities, together with anticipated cash flows from operations, should provide it with sufficient capital to fund its planned capital expenditures, the introduction of new services, anticipated losses and working capital requirements until the beginning of 2004. If the financial restructuring is unsuccessful and current conditions in the capital markets prevail, under Versatel's current capital structure it believes that it may not be able to raise additional capital to fund its operations beyond the beginning of 2004. If the financial restructuring is successful, Versatel believes that its remaining cash balance, together with anticipated cash flows from operations, will provide it with sufficient capital to fund its operations to at least the beginning of the second quarter 2003. Gross Billings Komtel's activities include certain premium dial-in services. For these services, Versatel collects per minute fees from Deutsche Telekom and then passes a portion of these fees on to a local content provider. As of April 1, 2001, Versatel reports these fees on a net basis, whereby reported revenues only include that portion of the fees from Deutsche Telekom that are not passed on to a local content provider. Until March 31, 2001, Versatel accounted for these services on a gross basis and recognized as revenue all fee amounts received because Versatel determined that it was not materially different than if reported on a net basis and there was no impact on operating loss, loss before income taxes and net loss (after taxes). Versatel believes gross billings are an important indicator of the volume of these premium dial-in services and assist comparability to prior periods. Accordingly, this earnings release discusses the level of gross billings for all periods presented and the costs relating to gross billings, which includes the costs passed on to local content providers. References herein to gross billings include all our revenues, plus fee amounts passed on to local content providers for the premium dial-in services offered by Komtel. The company's Banlance Sheet, Cash Flow and Income Statement reports may be viewed at: http://bankrupt.com/misc/Balance_Sheet_versatel.pdf; http://bankrupt.com/misc/Cashflow_versatel.pdfand http://bankrupt.com/misc/Income_Statement_versatel.pdf. =========== P O L A N D =========== TELEKOMUNIKACJA POLSKA: PLN 350MM Fine Not Yet Reversed ------------------------------------------------------- The PLN350 million fine levied against Telekomunikacja Polska by telecom watchdog URTip has not been reversed yet, contrary to reports that it had already been withdrawn in exchange for the cancellation of the company's legal petitions disputing the fine. According to the Warsaw Business Journal, there is still no word as to when the telecom regulator will do its share, after Monday's withdrawal of the firm's complaints and appeals regarding the activities regulated by the URTiP. URTiP head Witold Grabos had earlier promised to reconsider the fines imposed by his predecessor Kazimierz Ferenc, just before the latter left office at the end of March. The former regulator imposed the fines due to the company's refusal to fulfill an agreement with an alternative domestic long-distance provider and for the firm's publication of inaccurate information about its revenue from rental lines. Despite hinting that he might reverse the fines, Mr. Grabos nevertheless said last week that he will see to it that the company's obligations as dominant operator are met. To ensure fair competition in the market, Mr. Grabos said he will clarify the conditions for interconnection agreements between other operators and the firm as well as conduct an audit of the company by July, the report says. =========== R U S S I A =========== SIBUR INTERNATIONAL: Gives up Stake in BorsodChem Rt to Gazprom --------------------------------------------------------------- Siber International Ltd. recently transferred its 24.8% stake in Hungarian petrochemical firm BorsodChem Rt to Milford Holdings Ltd., an Ireland-based acquisition unit of Russian energy giant OAO Gazprom. According to Budapest Business Journal, the move is believed to be part of Sibur's plan to repay debts owed to Gazprom, which instituted bankruptcy proceedings against it early this year. In a February report, the Troubled Company Reporter-Europe bared that Sibur owes Gazprom some US$800 million in loans and other debts. An examination on Sibur's books following the insolvency petition showed it had also incurred several unexpected obligations with other firms. Russian prosecutors are now holding Sibur CEO Yakov Goldovsky and vice chairman Yevgeny Koshits for charges of abuse of authority and asset stripping. ========= S P A I N ========= JAZZTEL PLC: On the Verge of Collapse as Cash, Credit Dwindle ------------------------------------------------------------- Jazztel Plc, the London-based Spanish telecom operator, says its cash horde can only support the business until the end of the year and admits that a debt-restructuring scheme remains uncertain. Citing a statement to Spanish securities regulators last week, The Deal.com says Jazztel's has only EUR185.9 million and bank credits of about EUR200 million, enough to last its fiber-optic communication business at least through the end of the year. The company also warned that it might not be able to pull off its debt-restructuring plan, the news outfit says. "The debt restructure operations are complicated in economic and legal aspects. And although other U.S. and European companies have completed similar plans in the past with success, there is no certainty that Jazztel can launch [such a plan] with success," the statement to regulators said. In the first quarter, the company was able to buy back its high- yield bonds originally worth EUR56.8 million for only EUR21.4 million. This deal, plus a similar transaction last year, helped cut debts from EUR846 million to EUR676 million. Nevertheless, this debt-burden is still about four times its Spanish market value, says the report. The company managed to cut almost half its losses in the first quarter to EUR33.1 million compared with the year-earlier figure. The company says it doesn't expect a net income until at least 2005. Jazztel hired Goldman Sachs International and J.P. Morgan Chase & Co. in April to manage a bond-restructuring plan, but the scheme has yet to be implemented. The firm, in the meantime, plans to cut 16% of its workforce in Spain and Portugal, or 235 jobs, in order to save EUR20 million in expenses. The company had recently sent home 143 employees. Shares of the company have lost 50% of their value this year and 83% since the initial public offering in December 1999, the report says. The company plans to delist from Nasdaq by the end of May. JAZZTEL PLC: Notice of Annual General Meeting of Shareholders ------------------------------------------------------------- Jazztel, a company incorporated under the laws of the United Kingdom and having its registered office in London, U.K., hereby gives notice to the shareholders in the Company of the Annual General Meeting of shareholders to be held at the offices of Linklaters, One Silk Street, London EC2Y 8HQ, U.K on June 11, 2002 at 12 p.m. (British Summer Time) with the following AGENDA 1 Receive the Company's accounts and the reports of the Directors and Auditors for the year ended 31 December 2001. 2 Reappoint Arthur Andersen as Auditors and to authorise the Directors to fix the remuneration of the Auditors. 3 Re-elect Miguel Sal�s as Director of the Company. 4 Re-elect Massimo Prelz as Director of the Company. 5 Re-elect Eduardo Merig� as Director of the Company. 6 Approve the increase in the Company's authorised ordinary share capital from 77,500,000 to 90,000,000 by the creation of 12,500,000 ordinary shares of Euros 0.08 each. 7 Approve that the authority conferred on the Directors by paragraph 10.2 of Article 10 of the Company's Articles of Association be renewed for the period ending on the date of the Annual General Meeting in 2007 or on the date which is five years from the date on which this resolution is passed, whichever is the earlier, and for such period, the Section 80 Amount shall be Euros 2,411,701.92. 8 Approve the 2002 Share Option Scheme. 9 Approve that the authority conferred on the Directors by paragraph 10.3 of Article 10 of the Company's Articles of Association be renewed for the period ending on the date of the Annual General Meeting in 2007 or on the date which is five years from the date on which this resolution is passed, whichever is the earlier, and for such period, the Section 89 Amount shall be Euros 2,411,701.92. 10 Amend Article 50 of the Articles of Association to reduce the quorum for shareholder meetings of the Company. The Notice of an Annual General Meeting containing the full text of the resolutions to be approved, plus an explanatory letter, are deposited for review by shareholders at the Company's office at Avenida de Europa 14, Parque Empresarial La Moraleja, 28108 Alcobendas (Madrid), Spain as well as at the Company's registered offices at 2 Astrop Mews, Hammersmith, London W6 7HR, U.K. and a copy can be obtained free of charge at the above addresses and at the e-mail address contact@jazztel.com. The Board has concerns whether a quorate meeting will be held. Should the meeting be inquorate, it is the intention of the Board pursuant to s.371 Companies Act 1985 to seek an order from the Court for this meeting to be reconvened ten days after the date for which this meeting is hereby convened, at the offices of Linklaters, One Silk Street, London, EC2Y 8HQ on Friday 21 June at 12 p.m. (British Summer Time), or on such other day at such place and/or time as the Court may direct. Shareholders who appear on the register of members of the Company can vote in person or by proxy using the proxy form drawn up by the Company and which can also be obtained from the above addresses free of charge. Shareholders who are beneficial owners of shares and hold their interest in shares through the book-entry systems of Euroclear or Clearstream must make appropriate arrangements through Euroclear or Clearstream in order to exercise the votes attached to the underlying shares in the Company in which they are interested. Such arrangements may be effected through the intermediary of a bank or securities institution, which is an account holder with Euroclear or Clearstream and where the relevant shares are held in custody. Jose Manuel de Carlos Secretary of the Board of Directors Jazztel plc =========== S W E D E N =========== FRAMFAB AB: Reveals January 1 - March 31, 2002 Interim Report ------------------------------------------------------------- Framfab -- www.framfab.com -- has posted an operating profit before restructuring costs for the second consecutive quarter. The profit was SEK 0.1 million (-1,049.2) compared to 2.8 million for the fourth quarter of 2001. A restructuring provision of SEK -8.8 million (US$0.862 million) was recorded in the quarter, chiefly for measures taken in France. Operating loss (EBIT) after restructuring provisions was SEK -8.7 million (-1,545.5). Profit after financial items before restructuring costs for the period was 2.4 million (-1,433.3) and Loss after financial items and restructuring costs (EBT) was SEK -6.4 million (-1,929.6). For the last two quarters the subsidiaries in Denmark, the Netherlands and Sweden recorded good sales and operating profit (EBIT). Total revenues for the Group during the quarter was SEK 107.9 million (264.0). Liquid funds ended the quarter at SEK 96.4 million. Cash flow from operating activities amounted to SEK -15.3 million (-196.2) for the period, compared to SEK -23.4 million for the fourth quarter of 2001. Thus far in 2002, Framfab has entered into a number of new long- term contracts with major organizations including Avanturo and HDI in Germany, Blumenb�ro and the TV channel BNN in the Netherlands as well as Clarins in France. In the first quarter, the board appointed Anders Ekman CEO and Christian Luiga CFO for the Company. Both assumed their positions in April 2002. Due to the uncertain market situation, the future is difficult to forecast. It is currently difficult to predict whether the second quarter revenue will exceed the first quarter. Positive cash flow will be reached later than in the second quarter as previously forecasted. The Board confirms that the Company's cash balance is satisfactory for the ongoing operation. Framfab is cautiously assessing possible growth opportunities for the second half of the year. Framfab continues to attract new customers in all of its markets and is well positioned in the industry to take advantage of a possible upswing in the market. The company's income statement and balance sheet may be viewed downloaded from: http://bankrupt.com/misc/2002_q1_engelsk_rapport_framfab.pdf. =========================== U N I T E D K I N G D O M =========================== BRITISH AIRWAYS: EasyJet to Take up Option on German Subsidiary --------------------------------------------------------------- EasyJet's expansion in Europe will not stop the impending acquisition of Go. Last week, the company said it intends to exercise an option to buy Deutsche BA, the loss-generating German unit of British Airways, says the Financial Times. The move poses another challenge to Lufthansa's dominance in the German market, where Deutsche BA plays second fiddle and Ryanair constantly gaining ground on the incumbent's market share. The report says EasyJet has an exclusive option to take over the German subsidiary by virtue of an agreement with British Airways, which will expire March 31 next year, extendable to July 3. The firm paid EUR5 million for signing this option and continues to pay EUR600,000 a month. According to British Airways, the sale could be worth between GBP18.3 million and GBP28 million, depending on when EasyJet takes up the option. Deutsche BA operates exclusively on domestic German routes and is separate from British Airway's mainline operations. CONSIGNIA: Industry Minister Admits Failed Talks With TPG --------------------------------------------------------- Industry minister Douglas Alexander confirmed before a select committee recently that Consignia will no longer pursue its foreign expansion following the recent failure of talks with Dutch postal giant TPG. According to the Independent, Mr. Alexander had allegedly told the committee that Consignia will instead focus on cutting its cost, believed to be GBP1.5 million a day, and return it to profitability before the market is opened to competition. The minister admitted that talks with TPG had gone on for eight months and centered on a merger of Royal Mail and Parcelforce with TPG. Accordingly, discussions commenced after Secretary of State for Trade and Industry Patricia Hewitt gave Consignia authorization to enter negotiations. The talks ended this March without an agreement. Mr. Alexander said a range of issues caused the failure of talks, among them regulatory and industrial relations issues. He also added that valuation of the two businesses had also caused several disagreements. Consignia's overseas holdings include German Parcel. The state- owned postal company paid GBP300 million for this German company at a time when its costs were running out of control in the UK, the Independent says. EQUITABLE LIFE: CEO Thomson Admits Shaky Financial Footing ---------------------------------------------------------- Equitable Life CEO Charles Thomson admitted last week that the fund's solvency margin is "relatively thin," confirming speculations that the firm's finances are still unstable despite the compromise deal reached with policyholders early this year. Speaking before the annual conference of the National Association of Pension Funds, Mr. Thomson also announced that the company will not pay any guaranteed bonuses to policyholders for "the next few years." The Times quoted Mr. Thomson as saying that the main priority of the board for now is "keeping [Equitable] solvent and running it in the interests of policyholders." He said the company will only pay the guarantees embedded in most Equitable Life policies. The chief executive blamed the stock market slump for the unstable footing of the with-profits fund. Although the compromise deal has definitely removed the "uncertainty" from the fund, the dire state of the market continues to impact the company, he said. "Had the past year [in the stock market] been like most of the previous 20 years I'd have been standing here telling you that our job was nearly done," Mr. Thomson said. The GBP18 billion fund registered a 6% drop last year, despite its relatively low equity weighting. Earlier this month, the firm also reported a shrink in the pot of money set aside for bonus payments last year from GBP2.2 billion to almost nil, the report says. Hargreaves Lansdown pensions development manager Tom McPhail says the chief's estimate of the gap of a few years before bonus payments will resume was "optimistic." Annuity Bureau Director Ronnie Lymburn, on the other hand, believes the stock market would need to rally by about 50% to 60% to lift Equitable's with-profits fund clear of the threat of insolvency. At the current level, this means the FTSE 100 should shoot up to 7,500 from the present 5,200 platform. "We think Equitable is probably in the red to the tune of close on 20% of total assets though it is impossible to say exactly what the total assets are as they shrink every time people take their money out of the fund," Mr. Lymburn told The Times. The fund lost more than GBP6 billion last year due to heavy withdrawals of redemptions and maturities, the report says. INVENSYS PLC: Rexnord Sale Key to Getting Back Credibility ---------------------------------------------------------- The sale of Rexnord, a subsidiary based in Milwaukee, Wisconsin, will be pivotal to investors' view on the ability of Invesys Plc to reduce its substantial debt, says the Financial Times. The paper says this disposal is expected to fetch the company GBP500 million to GBP600 million, representing the largest chunk in the company's GBP1.5 billion asset-disposal program. The company is currently hobbled by GBP3.3 billion of debts and this disposal would make or break investors' perception on the restructuring program of newly appointed CEO Rick Haythornthwaite, the report says. Investors have already been disappointed after the company gave in to an US$80 million reduction on the price tag of the battery arm sent to Enersys of the United States. The original asking price was US$425 million, says the paper. Several interested parties are now believed to be jockeying for position, mostly from trade and financial buyers. Sources close to the negotiations told the paper that the formal sale process only began in recent weeks. Invensys targets September for the completion of the deal. Rexnord makes everything from mechanical seals for aircraft and gearboxes to bucket elevators for use in cement factories, says the paper. Analysts believe it had sales of about GBP500 million and operating margins of about 10% last year. Invensys has named Bank of America and Deutsche Bank as advisers to the sale. These banks had also arranged the US$1.39 billion multi-currency revolving credit facility for the company. Rexnord would be the third business Invensys has sold, since a string of profit warnings triggered a loss of investor confidence and forced Allen Yurko to resign as chief executive last year, says the paper. ITV DIGITAL: Only Foreign Media Groups Are Interested in Licenses ----------------------------------------------------------------- ITV Digital could end up in the hands of a foreign operator as British broadcasters continue to shun the licenses being peddled by the Independent Television Commission, says The Times. According to the paper, only foreign media groups have so far indicated interest in buying the vacated licenses of ITV Digital. Other parties have until Thursday to tender an offer. These potential foreign buyers, however, do not include French media giant Vivendi Universal or Germany's Bertelsmann, though a large American media company is involved, the paper says without identifying the firm. The Commission is believed to be keen on finding a buyer so that BBC won't end up with the licenses by default. The broadcasting regulator has allegedly told potential buyers that it is willing to compromise on the nature of the licenses and that it would be prepared to negotiate on the balance between the number of pay- channels and free-to-air channels embedded in the licenses. BBC wants digital television to be converted into free-to-air service, arguing that the government's plan to make this platform a pay-TV business has failed. The channel cannot also operate a pay-TV platform because of its charter. MARCONI PLC: No Rescue Plan Expected Along With Full-year Report ---------------------------------------------------------------- It is highly unlikely that a debt-restructuring package could be completed before Marconi Plc releases its full-year results this week, says the Telegraph. According to the paper, sources privy to the negotiations with creditors acknowledge that the deal is way too complex for an agreement to be reached soon. There are currently two blocks of creditors negotiating the rescue package: bondholders and banks. Both are owed GBP4 billion. The deal, based on a revised business plan, will have most of the debt converted into new shares, wiping out existing shareholders and handing control of the company to the creditors. The report says intensive negotiations have been ongoing the past two weeks. NTL INCORPORATED: New NTL, Euroco Executives to Get Share Options ----------------------------------------------------------------- NTL senior management executives will be offered a lucrative option once the company has emerged from Chapter 11 protection, reports the Telegraph. Citing documents filed before a U.S. court handling the firm's bankruptcy proceedings, the paper says the "New NTL" will reserve 20 million shares for issuance under the incentive scheme. This represents roughly 10% of the new equity. Similarly, "Euroco", the holding company for the units outside U.K. and Ireland, will earmark 2 million shares for its own senior management. The company expects to exit from bankruptcy later this year. The paper says "New NTL" will have a board of directors composed of nine members, including a chairman and chief executive, selected by a steering committee of bondholders. The directors will soon be named in documents to be filed before the court in the coming weeks. Said documents will also outline changes to the existing management of NTL Inc. NTL INCORPORATED: Consolidated Balance Sheet on December 31, 2001 ----------------------------------------------------------------- NTL Incorporated and Subsidiaries Consolidated Balance Sheets At December 31, 2001 Assets Current assets: Cash and cash equivalents $504,600,000 Accounts receivable -- trade, less $133,800,000 allowance for doubtful accounts 683,300,000 Other 365,200,000 --------------- Total current assets 1,553,100,000 Fixed assets, net 12,573,300,000 Intangible assets, net 1,985,600,000 Investments in and loans to affiliates, net 272,400,000 Other assets, net of accumulated amortization of $150,300,000 449,800,000 --------------- Total assets $16,834,200,000 =============== Liabilities and shareholders' deficiency Current liabilities: Accounts payable $430,000,000 Accrued expenses and other 1,013,100,000 Accrued construction costs 144,800,000 Interest payable 303,900,000 Deferred revenue 505,800,000 Current portion of long-term debt 17,666,100,000 --------------- Total current liabilities 20,063,700,000 Long-term debt 102,300,000 Other 176,000,000 Commitments and contingent liabilities Deferred income taxes 260,900,000 Redeemable preferred stock -- $.01 par value, plus accreted dividends; liquidation preference $2,834,500,000; less unamortized discount of $53,400,000; issued and outstanding 2,100,000 2,773,700,000 Shareholders' (deficiency) equity: Series preferred stock -- $.01 par value; authorized 10,000,000 shares; liquidation preference $3,000,000,000; issued and outstanding 3,000,000 -- Common stock -- $.01 par value; authorized 800,000,000 shares; issued and outstanding 276,600,000 2,800,000 Additional paid-in capital 13,720,000,000 Accumulated other comprehensive (loss) (1,072,800,000) (Deficit) (19,192,400,000) --------------- Total shareholders' deficiency (6,542,400,000) --------------- Total liabilities and shareholders' deficiency $16,834,200,000 NTL INCORPORATED: Background & Description of the Firm ------------------------------------------------------ NTL Incorporated 110 East 59th Street 26th Floor New York, New York 10022 Telephone (212) 906-8440 Fax (212) 752-1157 http://www.ntl.com Since 1993, NTL grew through various acquisitions and capital expansions to become one of the largest providers of broadband communications services to residential and commercial customers throughout the United Kingdom, Ireland, Switzerland, France, Germany, and Sweden. NTL is also is one of the largest providers of broadcast transmission and towers services throughout the UK. The Company serves more than 8,500,000 residential cable, telephone, and Internet customers within its service areas and covers major European cities like London, Paris, Frankfurt, Zurich, Stockholm, Geneva, Dublin, Manchester, and Glasgow. NTL is the largest cable television operator and a leading provider of business and broadcast services in the UK, and the owner of 100% of Cablecom in Switzerland and Cablelink in Ireland. As of December 31, 2001, the Company had approximately 4,800,000 residential customers on its wholly owned cable systems in the UK, Ireland, and Switzerland. The Company also has significant equity stakes in various other European cable operators, including a 27% interest in Suez-Lyonaise Telecom (France), a 32.5% interest in iesy Hessen GmbH (formerly known as eKabel) (Germany), and a 34% interest in B2 Bredband AB (Sweden). As of December 31, 2001, Suez-Lyonaise Telecom, iesy Hessen GmbH, and Svenska Bredbandsbolaget AB collectively served approximately 2,300,000 customers. For the 12-month period ended December 31, 2001, the Company recorded a net loss of $14,241,300,000 on revenues of $3,699,200,000. At December 31, 2001, the Company's books and records reflected, on a GAAP basis, $16,834,200,000 in total assets and $23,377,600,000 in liabilities. The Company has three predominant lines of business: (a) Consumer Services. The Consumer Services group includes residential telephone and cable television service, Internet access, and interactive services operations in service areas in the UK and Ireland, and its networks or the networks of its affiliates are currently being upgraded to provide all of those services in France, Switzerland, Germany, and Sweden. By marketing these services as a package -- offering customers a "triple-play" of services at a reduced aggregate cost -- the Company effectively competes with other providers that can offer only one or two of these services. (b) Business Services. The Business Services group operates primarily in the UK, providing a comprehensive range of voice, data, and application-based communications solutions, including business telephone service, national and international wholesale carrier telecommunications, Internet services, and radio communications services for the emergency services community. (c) Broadcast Services. The Broadcast Services segment operates primarily in the UK. Services include digital and analog television and radio broadcasting, rental of antenna space on the Company's owned and leased towers and sites and associated services, and satellite and media services. With more than 2,300 towers and other radio sites across the UK, the Company provides a full range of wireless solutions to the mobile communications industry, including providers of mobile telephony, paging, specialized mobile radio, and wireless local loop services. In addition, through its national infrastructure of owned and shared transmission sites and owned network of transmitters, developed during the 47-year history of National Transcommunications Ltd. (acquired by the Company in 1996), the Company provides broadcast signals for the three commercial national television channels in the UK and many of the UK's independent local, regional, and national radio broadcasters. Finally, the Company owns and operates satellite up- linking facilities consisting of 30 fixed satellite uplink dishes (able to access more than 50 satellites with global coverage), a network of mobile and transportable uplinks, management and control systems, and all associated operations and maintenance. Until recently, the Company also provided similar broadcast services in Australia. On or about April 2, 2002, the Company consummated the sale of its interest in its Australian subsidiaries to Macquarie Communications Infrastructure Holdings Pty Limited for approximately US$448,000,000. Events Leading To The Debtors' Chapter 11 Filings Barclay Knapp, NTL Incorporated's President and Chief Executive Officer, explains that the Company historically incurred operating losses and negative operating cash flow. In addition, the Company required significant amounts of capital to finance construction of their networks, connection of customers to the networks, other capital expenditures, and for working capital needs including debt service requirements. These liquidity requirements were met through cash flow from operations, amounts available under credit facilities, vendor financing, and issuances of high-yield debt securities and convertible debt securities in the capital markets and convertible preferred stock and common stock to strategic investors. Both the equity and debt capital markets have recently experienced periods of significant volatility, particularly for securities issued by telecommunications and technology companies. The ability of telecommunications companies to access those markets as well as their ability to obtain financing provided by bank lenders and equipment suppliers has become more restricted and financing costs have increased. During some recent periods, the capital markets have been largely unavailable to new issues of securities by telecommunications companies. NTL's public equity is no longer trading on the New York Stock Exchange, and the Debtors' debt securities are trading at or near all time lows. These factors, together with the Debtors' substantial leverage, mean that the Debtors do not currently have access to their historic sources of capital. After determining that cash flow from operations would not be sufficient to enable them to meet all outstanding debt obligations, NTL began to implement measures to preserve their valuable enterprise: * On or about December 10, 2001, NTL announced a series of cost-cutting measures aimed at streamlining operations and enhancing overall efficiency. * On or about December 20, 2001, NTL was advised of the formation of the Steering Committee. * In mid-to-late January 2002, the Company approached its Secured Lenders to request a waiver under the Credit Facilities to initiate discussions with the Steering Committee regarding a potential recapitalization. * On or about January 31, 2002, NTL announced the appointment of Credit Suisse First Boston, JP Morgan Chase, and Morgan Stanley to advise the Debtors on strategic and financial alternatives to strengthen the Company's balance sheet and reduce debt. * On or about February 4, 2002, NTL's board of directors decided not to declare dividends on its 13% percent senior redeemable exchangeable preferred stock, after previously determining not to declare dividends on December 31, 2001 on certain series of preferred stock held by France Telecom. * On or about February 20, 2002, the Company and its advisors first met with members of the Steering Committee and their newly-appointed advisors. * On or about February 21, 2002, NTL announced an agreement to sell its Australian operations for approximately US$448 million in cash. * Throughout March 2002, the Company continued to work with the Steering Committee in an effort to reach agreement on the terms of a mutually acceptable reorganization plan. * On or about April 1, 2002, the Company announced that after consideration of a request of the Steering Committee, they would not make quarterly interest payments due April 1 on NTL Communications Corp.'s 9-1/2% Senior Notes, 11-1/2% Senior Notes, and 11-7/8% Senior Notes. * On or about April 16, 2002, the Debtors announced an agreement-in-principle with the Steering Committee and the Preferred Shareholders on the terms of a comprehensive recapitalization of the Company. In conjunction with this agreement, NTL announced that after consideration of a request of the Steering Committee, they would not make quarterly interest payments due April 15 on NTL Communications Corp.'s 12-3/4% Senior Notes, and NTL Inc.'s and NTL (Delaware), Inc.'s 5-3/4% Convertible Subordinated Notes. * On or about May 2, 2002, the Debtors announced an agreement-in-principle with the steering committee of Secured Lenders under the Credit Facilities to support the agreement-in-principle previously reached with the Steering Committee and the Preferred Stockholders. In sum, Mr. Knapp explains, the downturn in the telecommunications and technology capital markets, the delisting of NTL stock from the New York Stock Exchange, the depressed trading price of the Debtors' debt securities, and the Company's substantial leverage, have foreclosed NTL's ability to utilize the capital markets at this time to procure additional financing for their continued operations. NTL needs to modify its capital structure. NTL and a large group of bondholders have agreed to a plan that will reduce the Company's debt obligations by approximately $10.6 billion through a pre-arranged Chapter 11 proceeding. "These cases are the final steps in effectuating the Debtors' capital restructuring," Mr. Knapp says. NTL INCORPORATED: Key Dates of Firm's Bankruptcy Proceeding ----------------------------------------------------------- 05/08/02 Voluntary Petition Date 05/23/02 Deadline for filing Schedules of Assets and Liabilities 05/23/02 Deadline for filing Statement of Financial Affairs 05/23/02 Deadline for filing Lists of Leases and Contracts 05/28/02 Deadline to provide Utilities with adequate assurance 06/07/02 Deadline to make decisions about lease dispositions 08/06/02 Deadline to remove actions pursuant to F.R.B.P. 9027 09/05/02 Expiration of Debtor's Exclusive Plan Proposal Period 11/04/02 Expiration of Debtor's Exclusive Solicitation Period 05/07/04 Deadline for Debtor's Commencement of Avoidance Actions Organizational Meeting with UST to form Committees Bar Date for filing Proofs of Claim First Meeting of Creditors pursuant to 11 USC Sec. 341 NTL INCORPORATED: Where to Get Additional Information ----------------------------------------------------- For more information about NTL's bankruptcy proceeding, subscribe to our other publication, NTL BANKRUPTCY NEWS. This newsletter is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtors' cases. The subscription rate is US$45 per issue. Newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Re-mailing of NTL BANKRUPTCY NEWS is prohibited. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. To get a copy of NTL BANKRUPTCY NEWS, please contact: Bankruptcy Creditors' Service, Inc. 24 Perdicaris Place Trenton, NJ 08618 Telephone (609) 392-0900 Fax (609) 392-0040 E-mail: peter@bankrupt.com We have published similar newsletters tracking billion-dollar insolvency proceedings since 1990, starting with Federated Department Stores. Currently, we provide similar coverage about the restructuring proceedings involving Global Crossing, Williams Communications, FLAG Telecom, McLeodUSA, Adelphia Business Solutions, Winstar, 360networks, ICG Communications, PSINet, Exodus Communications, Lernout & Hauspie and Dictaphone, Federal- Mogul, Hayes Lemmerz, Exide Technologies, W.R. Grace & Co., Owens Corning, Armstrong World Industries, USG Corporation, Safety- Kleen, Laidlaw, The IT Group, Enron Corp., Covanta Energy Corp., Pacific Gas and Electric Company, Reliance Group Holdings & Reliance Financial, NationsRent, ANC Rental, Burlington Industries, Chiquita Brands, Polaroid Corporation, Lodgian, The FINOVA Group, Inc., Comdisco, Fruit of the Loom, Pillowtex, Warnaco, Kmart Corp., Ames Department Stores, Service Merchandise, Bridge Information Services, Imperial Sugar, The Loewen Group International, Inc., Vlasic Foods, AMF Bowling, Harnischfeger Industries, Inc., Vencor, Inc., Sun Healthcare Group, Inc., Mariner Post-Acute & Mariner Health, Genesis Health & Multicare, Integrated Health Services, National Steel, Bethlehem Steel, LTV, Wheeling-Pittsburgh, Kaiser Aluminum and Metals USA. P&O PRINCESS: Carnival Kept on "Watch Negative" Due to Merger Bid ----------------------------------------------------------------- The uncertainty over the bid of Carnival Corporation to take over P&O Princess has caused Fitch Ratings to keep the Miami-based cruise operator on Rating Watch Negative. This, despite Carnival's above-industry performance in the first quarter and better prospects for the year, as advance bookings for the second, third, and fourth quarter continue to run above last year's pace. Carnival beat forecasts for the industry following the September 11 terrorist attacks in the United States, recording a drop in net revenue yields of only 7.5% in the first quarter, better than the 15% projection. In the Fitch ratings board, Carnival enjoys a grade of "A" for its senior notes and "F1" for its commercial paper. Nonetheless, the ratings agency believes Carnival still deserves the Rating Watch Negative status due to its involvement in the bidding war for P&O Princess. Carnival faces tough opposition from competition authorities in Europe, including travel agents, shipbuilders and port operators. The European Competition Commission is currently evaluating the effects of a Carnival-Princess merger with the results expected around mid-summer. The Troubled Company Reporter-Europe recently said that initial tally of questionnaires sent by the Commission to stakeholders in the European cruise market shows overwhelming opposition to the combination. For more information, contact: Marcy C. Odlaug 1-312-606-2338, Chicago or Tom Razukas 1-212-908-0223, New York. Media Relations: James Jockle 1-212-908-0547, New York. VERSAILLES: Lead Auditor Faces Fine, Suspension of License ---------------------------------------------------------- The Joint Disciplinary Scheme, the U.K.'s accounting watchdog, lodged two complaints last week against Thomas Dales, the lead auditor of collapsed trade finance group Versailles, says the Telegraph. The first complaint alleges breach of accounting ethics by failing to act with integrity when sending letters of comfort to the company's directors. The other complaint accuses the auditor of failing to undertake professional work with due skill, care and diligence, says the report. Mr. Dales, a founding partner of the accounting firm Nunn Hayward, served as lead audit partner at Versailles between 1998 and 1999. The trade finance group, a once high-flying money- lending business, collapsed amid allegations of fraud and improper accounting in December 1999. Established in 1991 to offer bridging loans to companies awaiting customer payments, Versailles shares reached as high as 250p from the initial flotation value of 8p in 1995, making founder and CEO Carl Cushnie the richest black man in Britain with a paper fortune of GBP350 million, says the report. Today, Mr. Cushnie and ex-Finance Director Frederick Clough are now being tried for fraudulent trading by the Serious Fraud Office. Receivers PricewaterhouseCoopers has also issued a separate writ against Mr. Clough, alleging "breach of fiduciary duty, deceit and conspiracy to defraud," the report adds. A PWC investigation has concluded that circular payments between Versailles Group entities artificially inflated turnover. If found guilty by a tribunal made up of peers, Mr. Dales could be stricken off from the list of chartered accountants and fined. The JDS is also investigating his accounting firm Nunn Hayward. WESSEX WATER: Sale to YTL Assured With Bond-buyback's Completion ---------------------------------------------------------------- The takeover of Wessex Water by YTL of Malaysia is sealed now that Azurix, the water utility unit of Enron Corp., has received bondholders' backing for the deal with their accession to a bond buyback, says the Financial Times. Until last week, the sale of Wessex to YTL remained shaky, as Azurix needed at least 51% approval from bondholders for the deal. The week before that, the utility was forced to raise the third time its offer for the bonds. Azurix first offered to re-purchase bonds at 88% of face value but increased this to 92.25%, as holders of two tranches of dollar-denominated bonds held out, says the paper. The utility arm of failed American energy group Enron undertook the buyback so that YTL would no longer be burdened by the obligation once it takes over Wessex. Enron bought Wessex in 1998 for GBP1.36 billion as part of its diversification out of its core energy business. XENOVA GROUP: Discloses First-Quarter 2002 Results -------------------------------------------------- Xenova Group plc, the Berkshire-based drug manufacturer, Thursday announced its results for the quarter ended March 31, 2002. Multi-drug resistance program A GBP73.7m (US$105 million) collaboration with QLT Inc for the development and North American marketing of Tariquidar (the P-gp pump inhibitor formerly known as XR9576) was announced in August 2001. Since then, good progress has been made towards the anticipated commencement of Phase III clinical trials in mid-2002. Initiation of trial centres is continuing on schedule and all necessary FDA approvals are now in place. Tariquidar is being developed to address the large, frequently occurring problem of multidrug resistance faced by cancer patients whose tumours do not respond to chemotherapy. Data were presented at the American Association for Cancer Research (AACR) meeting in April 2002 relating to the pharmacokinetic (PK) interaction between Tariquidar and the cytotoxic drugs paclitaxel, doxorubicin and vinorelbine and demonstrating that no significant interaction occurred. Further data also presented at the AACR conference related to in vitro studies for Tariquidar and demonstrated that clinically significant interaction is unlikely between Tariquidar and chemotherapy agents. An abstract has been accepted for the May 2002 meeting of the American Society of Clinical Oncology (ASCO), which demonstrates that Tariquidar has minimal effects on the PK interaction of paclitaxel, doxorubicin and vinorelbine and can be administered with full-dose chemotherapy in patients with cancer. Novel mechanism of action anti-cancer programme: Following the December 2001 announcement that Xenova had entered into a North American licensing agreement with Millennium Pharmaceuticals Inc (Millennium) for its compounds XR11576, XR5944 and XR11612, it was announced in February 2002 that patient dosing began in an open-label Phase I trial for the oral compound, XR11576. Preclinical studies continue for compounds XR5944 and XR11612. These compounds comprise a programme for the treatment of solid tumours. The compounds are believed to be novel DNA targeting agents that affect the DNA replication process through a mechanism of action which involves the dual inhibition of topoisomerases I and II. Sales of the two leading single topoisomerase inhibitor compounds alone are estimated to have been in excess of US$800 million in 2000. There are no currently marketed dual topoisomerase inhibitors. TA-HPV: As announced in March 2002, successful results of a physician-initiated Phase IIa trial of Xenova's therapeutic vaccine, TA-HPV were published at the meeting of the British Society of Investigative Dermatology. Researchers at Addenbrooke's Hospital, Cambridge, U.K. showed the vaccine to be safe and well tolerated in a study of 12 women with high grade human papillomavirus positive ano-genital intraepithelial neoplasia. TA-HPV is currently undergoing an open-label, physician-sponsored Phase IIa "prime-boost" trial in conjunction with a further Xenova vaccine, TA-CIN, the results of which are anticipated in the second half of 2002. TA-CD: It was announced in April 2002 that patient dosing had begun in a Phase IIa dose escalation trial for Xenova's anti- cocaine addiction vaccine, TA-CD. The trial is being conducted by Dr Thomas Kosten of Yale University School of Medicine and is designed to evaluate the safety and immunogenicity of TA-CD using a 4 or 5 dose vaccination schedule. The study is being funded in part by the US National Institute on Drug Abuse. OX40: It was also announced in April 2002 that Xenova has signed an exclusive development and licence agreement with Genentech Inc, worth up to o44.2m ($63m), granting Genentech worldwide rights to develop and market products primarily targeting disorders of the immune system based on Xenova's OX40 receptor protein and anti-OX40 ligand antibody programmes. Xenova retains all rights to OX40 ligand and stimulatory anti-OX40 antibodies for its proprietary development and commercialisation in oncology and other applications. Other Programmes: Research and development continued throughout the first quarter for the Group's other programmes, and includes a Phase I trial in melanoma for the vaccine DISC-GMCSF and a Phase I trial for the anti-nicotine vaccine, TA-NIC. Xenova's research pipeline includes programmes such as those for PAI-1 inhibition in the treatment of cancer and cardiovascular disease, and multi-drug resistance protein (MRP) inhibition in the treatment of cancer. An update will be provided for all of Xenova's product development programs at the time of the interim (Quarter 2) results in August this year. Financial Summary Operating Performance In the three months to March 31, 2002, the Group's revenues from licensing agreements, strategic partnerships and manufacturing outsourcing were GBP2.8 million (US$3.9 million). In accordance with the Group's revenue recognition policy, of the GBP6.9 million (US$10 million) received from QLT in 2001 as part of the Tariquidar licensing agreement, GBP0.6 million (US$0.9 million) was included in the quarter to March 31, 2002, with a further GBP5.7 m (US$8.2 million) being deferred to future periods. Of the GBP7.9 million (US$11.3 million) received from Millennium GBP2.0 million (US$2.8 million) was recognized by the Group in the three months to March 31, 2002, with a further GBP5.9 million (US$8.4 million) being deferred to future periods. Other revenue included GBP0.2 million (US$0.3 million) in respect of ongoing contract vaccine manufacturing. Total operating expenses have reduced from GBP5.7 million (US$8.1 million) in the fourth quarter 2001 by 2% to GBP5.6 million (US$7.9 million) in the first quarter of 2002. The first quarter operating expenses for 2001 of GBP2.4 million (US$3.4 million) preceded the acquisition of Cantab Pharmaceuticals plc (Cantab). Research expenditure of GBP4.3 million (US$6.1 million) remained in line with the fourth quarter 2001 (GBP4.3 million (US$6.1 million)). Research expenditure in the first quarter of 2001, prior to the acquisition of Cantab, was GPB1.9 million (US$2.7 million). There is not expected to be a significant impact to research expenditure following the licensing agreements with QLT and Millennium until 2003 when cost reimbursement commences under the latter agreement relating to a programme of novel DNA targeting agents. The cost reductions made in quarter four 2001 were maintained in quarter one 2002, with administration expenses (excluding the amortisation of goodwill) remaining at GBP1.5 million (US$2.1 million). The subletting of excess facilities reduced net operating expenses by GBP0.2 million (US$0.3 million) in quarter one (2001: nil). Of the total administrative expenses for the three months to March 31, 2002 of GBP1.5 million (US$2.1 million), GBP0.3 million (US$0.4 million) relates to the amortization over a 10-year period of the goodwill in respect of the acquisition of Cantab in 2001. The increased net interest income reflects the increased cash and liquid resources balance held throughout the three months to March 31, 2002. The net loss per share in quarter one was 2p (2001: 3p). Cash and liquid investments Cash and liquid resources at March 31, 2002 totalled GBP17.1 million (US$24.3 million) (2001: GBP 8.1 million (US$11.5 million)). Cash of GBP 15.9 million ($22.7 million) and liquid resources of GBP 1.2 million (US$1.6 million) at March 31, 2002 (2001: cash GBP 8.1 million (US$11.5 million), liquid resources nil), excludes the receipt of GBP 3.5 million (US$5 million) in respect of licence fees payable by Genentech in respect of the OX40 deal announced in April 2002. Included in liquid resources is an investment in Cubist Pharmaceuticals Inc which subsequent to the 2001 year end fell in value, following an announcement by Cubist of clinical trial data, such that at the March 31, 2002 the share price was US$18.48 valuing the investment held at GBP1.2 million (US$1.6 million), representing a decline of GBP 1.0 million (US$1.5 million) from the valuation at 31 December 2001 of GBP 2.2 million (US$3.1 million). Share capital The number of shares in issue stood at 139.1 million as at 31 March 2002. The Directors do not currently propose a dividend for 2002 (2001: nil). Consolidated Profit and Loss Account (unaudited) Three Months Ended Unaudited Unaudited Unaudited 31 March 31 March 31 March 2002 2002 2001 $000 GBP000 GBP000 ______ ______ ______ Turnover (including share of joint venture) 3,972 2,789 - Less: share of joint venture revenue (37) (26) - ______ ______ ______ Turnover 3,935 2,763 - Operating expenses Research and development costs (6,109) (4,290) (1,873) Administrative expenses (2,081) (1,461) (480) ______ ______ ______ Total operating expenses (8,190) (5,751) (2,353) Other operating income 262 184 - ______ ______ ______ Group operating loss (3,993) (2,804) (2,353) Loss on sale of business: Adjustment to Discovery consideration - - (186) Share of operating loss of joint venture (46) (32) - ______ ______ ______ Total operating loss: Group and share of joint venture (4,039) (2,836) (2,539) Interest (net) 247 173 131 Amounts written off investments (1,471) (1,033) - Loss on ordinary activities before tax (5,263) (3,696) (2,408) Tax on loss on ordinary activities (R&D tax credit) 642 451 231 Loss on ordinary activities after taxation attributable to members of Xenova Group plc (4,621) (3,245) (2,177) ______ ______ ______ Loss per share (basic and diluted) (3c) (2p) (3p) Shares used in computing net loss per share (thousands) 139,057 139,057 69,251 US Dollar amounts have been translated at the closing rate on 31 March 2002 (GBP1.00: US$1.4241) solely for information. Condensed Consolidated Balance Sheet (unaudited) Unaudited Unaudited Unaudited As at As at As at 31 March 31 March 31 March 2002 2002 2001 $000 GBP000 GBP000 ______ ______ ______ Cash and liquid resources 24,326 17,082 8,105 Other current assets 6,347 4,457 1,292 Fixed assets (including goodwill)28,182 19,789 1,957 ______ ______ ______ Total assets 58,855 41,328 11,354 ______ ______ ______ Current liabilities (including provisions & deferred income) (20,953) (14,713) (1,636) Shareholders' equity (37,902) (26,615) (9,718) Total liabilities and shareholders' equity (58,855) (41,328) (11,354) ______ ______ ______ US Dollar amounts have been translated at the closing rate on March 31, 2002 (GBP1.00: US$1.4241) solely for information. Basis of preparation These unaudited statements, which do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985, have been prepared using the accounting policies set out in the Group's 2001 Annual Report and Accounts. The 2001 Annual Report and Accounts received an unqualified auditor's report and will be delivered to the Registrar of Companies. Going concern The Group is an emerging pharmaceutical business and as such expects to absorb cash until products are commercialised. The Directors have a reasonable expectation that the Group has, or can reasonably expect to obtain, adequate cash resources to enable it to continue in operational existence for the foreseeable future, and have therefore prepared the financial statements on the going concern basis. Xenova Group plc's product pipeline focuses principally on the therapeutic areas of cancer and immune system disorders. Xenova currently has a broad pipeline of eight products in clinical development. Xenova's lead programme is a P-glycoprotein antagonist for the treatment of multi-drug resistance in cancer, known as tariquidar or XR9576. Tariquidar has completed a successful series of three Phase IIa clinical trials and is expected to enter Phase III clinical development in mid 2002. Tariquidar is partnered for the North American market with QLT Inc. The Group has a well-established track record in the identification, development and partnering of innovative products and technologies and has partnerships with other major pharmaceutical companies including Lilly, Pfizer, Celltech, Millennium Pharmaceuticals and Genentech. For further information about Xenova and its products please visit the Xenova website at www.xenova.co.uk. Contacts: UK: Xenova Group plc Tel: +44 (0)1753 706600 David A Oxlade, Chief Executive Officer Daniel Abrams, Group Finance Director Hilary Reid Evans, Corporate Communications US: Trout Group/BMC Communications Tel: 001 212 477 9007 Press: Brad Miles (Ext 17) Lauren Tortorete (Ext 20) Investors: Jonathan Fassberg (Ext 16) Lee Stern (Ext22) Financial Dynamics David Yates/FionaNoblet Tel: +44 (0)207 831 3113 *********** 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. 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