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/raid1/www/Hosts/bankrupt/TCREUR_Public/020520.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 20, 2002, Vol. 3, No. 98 Headlines * F I N L A N D * SONERA CORPORATION: Watchdog Approves YIT's Primatel Acquisition * F R A N C E * RHODIA: Balks at Bonus Figures of Investors, Foregoes Bond Sale * G E R M A N Y * DEUTSCHE TELEKOM: Mulling 30,000 Redundancy Plan, Rumors Say KIRCHMEDIA: Appoints UBS Warburg as Sole Financial Advisor KIRCHMEDIA: Signs Deal on World Cup Rights in Portugal & Russia MOBILCOM AG: Cautions Parent Against Forcing It Into Insolvency SEEHAFEN ROSTOCK: Fitch Downgrades Unsecured Rating to 'B-' TELESENSKSCL AG: Billing Components Unit in Management Buyout * I T A L Y * FIAT SPA: Premier Hints Aid to Solve Crisis at 'Important' Firm FIAT SPA: Iveco Mulls Partnership With Competitor to Survive * N E T H E R L A N D S * LANDIS GROUP: Westcon Completes Landis Transaction LAURUS NV: Euronext Suspends Retail Group's Official Listing * P O L A N D * NETIA HOLDINGS: To Fulfill Contractual Obligations to Telia TELEKOMUNIKACJA POLSKA: Q1 Profit Slips 84%, But Still in Black * S W E D E N * ADCORE AB: Buys 60 Properties From Wihlborgs for SEK 1.2 BB ADCORE AB: Creates New Property Corporation, Renames Company LM ERICSSON: Selected by Tunisie Telecom For ENGINE Solution LM ERICSSON: Ericsson Will Supply T-Mobile With MMS Technology LM ERICSSON: Licenses GPRS Platform Solutions to Microcell SONG NETWORKS: Moody's Doubts Ability to Restructure Debts * U N I T E D K I N G D O M * BIG FOOD: Nears Deal With Axa Over Sale-and-leaseback Plan BOOKHAM TECHNOLOGY: Components Manufacturer Names New VP BRITISH ENERGY: Uncertain Domestic Outlook Triggers Downgrade BRITISH TELECOM: Reveals Upbeat Annual Results BRITISH TELECOM: Regains Financial Strength, Restores Dividend ITV DIGITAL: License Bidding Attracts Little Interest KINGFISHER PLC: Buyout Offer for Castorama Changes Stable Outlook KINGFISHER PLC: Castorama CEO Raps Hostile Bid, to Go to Court MARCONI PLC: Italian Subsidiary to Be Floated to Help Pay Debts PREMIER INTERNATIONAL: Latest Buy Strains Finances, Says Moody's ============= F I N L A N D ============= SONERA CORPORATION: Watchdog Approves YIT's Primatel Acquisition ---------------------------------------------------------------- YIT Corporation, the Helsinki-based construction and industrial group, signed an agreement whereby it acquired all the shares outstanding in Primatel Ltd. from Sonera Corporation. Primatel builds and maintains telecommunication networks. The approval of the competition authorities was required before the deal will enter into force. The Finnish Competition Authority has announced Tuesday its approved on YIT's acquisition. "The acquisition neither establishes nor strengthens a dominant market position, which significantly would restrict the competition on the Finnish market or a substantial part thereof", the Competition Authority states in its decision. Primatel Ltd will be consolidated into the YIT Group on June 1, 2002. For additional information, contact: Reino Hanhinen Group CEO YIT Corporation Telephone: +358 20 433 2454 Email: reino.hanhinen@yit.fi Esko Makela Executive Vice President YIT Corporation Telephone +358 20 433 2258 Email: esko.makela@yit.fi =========== F R A N C E =========== RHODIA: Balks at Bonus Figures of Investors, Foregoes Bond Sale --------------------------------------------------------------- Leading French chemicals specialist Rhodia has postponed a plan to issue bonds worth between EUR300-500 million due to the size of bonuses investors are demanding in exchange for buying the securities, says Les Echos. The company recently recorded a net loss of EUR213 million (US$183.5 million) in its 2001 accounts. Operating profit last year dropped to EUR16 million from EUR496 million, but the company said it expects a boost of EUR394 million this year. The company plans to speed up its restructuring program. It is not clear if the botched bond sale is a key part of this plan. For more information, contact Rhodia thru mail at 26, quai Alphonse Le Gallo, 92512 Boulogne-Billancourt cedex, or at telephone 33-1-55-38-40-00, or via e-mail at fi.com@eu.rhodia.com ============= G E R M A N Y ============= DEUTSCHE TELEKOM: Mulling 30,000 Redundancy Plan, Rumors Say ------------------------------------------------------------ Debt-strapped Deutsche Telekom is rumored to be planning a 30,000-redundancy package to help save cost and prevent its debts from ballooning further, says Total Telecom. The information was recently published by the industry paper under its Rumorwatch section and indicated that the buzz emanated from Financial Times Deutschland and other local German papers. Citing a report by FT Deutschland, the paper said a Verdi trade union source had recently disclosed that about 20,000 from the fixed-line business T-Com are set to go and another 10,000 from the other divisions are similarly threatened. But Bear Sterns debt analyst Simon Surtees believes the number is way too high. He acknowledges, though, that redundancy at the group is inevitable, but benign. Dresdner Kleinwort telecom analyst Hans Wittig also shares this view, says Total Telecom. "It's unlikely to be such a large number, and it's unlikely that anything will happen soon. What's more, it isn't that easy to lay off people just like that -- this is Germany," Mr. Wittig told the industry paper. He expects the group to trim the number of employees at the fixed-line unit to 100,000 from 120,000, but over a period of three years. Analyst admit the fixed-line unit will absorb the most hit as core capex spend plans for the year ahead indicate a 9% drop for T-Com, while T-Mobile and T-Systems have increases, says Total Telecom. A Deutsche Telekom spokesperson contacted by the paper recently refused to confirm or deny the number of workers about to go or the fact that it is planning a redundancy package. A Reuters report, however, quoted another spokeswoman who admitted that the group is indeed pushing ahead with plans to reduce the group headcount from 265,000, although compulsory redundancies were not planned. KIRCHMEDIA: Appoints UBS Warburg as Sole Financial Advisor ---------------------------------------------------------- KirchMedia GmbH & Co. KGaA has awarded a mandate to UBS Warburg, the group announced in a press statement Wednesday. The investment company will be assisting the Creditors' Committee, the interim trustee and the manager directors in their negotiations with investors. The Creditors' Committee approved the mandate on May 3, 2002, and the agreement was signed on May 5, 2002. Commissioning UBS Warburg means that there is not only a possibility of restructuring by way of transferring business business activities (rescue company), but that developments in the direction of other legally permissible procedures, such as a plan for insolvency proceedings, are no longer ruled out. KirchMedia's managing board said, "Media expertise, substantial knowledge of potential investors and the fact that there are no conflicts of interest in the case of UBS Warburg were the decisive factors influencing our decision." Florian Lahnstein, Head of Media, Technology and Telecommunications Germany at UBS Warburg commented, "We shall help to achieve an optimal result with the right partners and the right strategies." For further information, please contact: At KirchMedia: Hartmut Schultz Corporate Spokesman Telephone: +49 (0)89 9956-2324 Fax: +49 89 9956 2330 At UBS Warburg: Florian Lahnstein Corporate Spokesman Telephone: +44 207 568 5751 Fax: +44 207 568 2629 KIRCHMEDIA: Signs Deal on World Cup Rights in Portugal & Russia --------------------------------------------------------------- KirchSport AG, the company responsible for the global marketing and sales of the broadcast rights to the 2002 and 2006 FIFA World Cups, announced Monday two key television rights deals for the forthcoming event in Korea/Japan. The agreements were both signed with KirchSport AG's subsidiary company, KirchMedia WM AG, the rights-holding company for World Cup rights in Europe. These two agreements - for Russia and Portugal - mean that broadcasting deals are now in place for all 32 qualified nations. The Portuguese broadcasting agreement is with Sport TV and covers the 2002 FIFA World Cup. It means that soccer fans in Portugal will be able to see all 64 matches - Sport TV will be the only Portuguese channel broadcasting the entire competition. Portugal's qualification for the 2002 FIFA World Cup ensures a very high level of interest in this year's event. Key matches will also be sub-licensed to free-to-air broadcasters, in order to fulfil the conditions of FIFA's Distribution Policy. For Russia, the deal is with state broadcaster RTR, ensuring Russian audiences universal access to the 2002 FIFA World Cup. Another Russian channel, ORT, will be a sub-licensee and provide additional coverage in Russia for the event. Each channel will cover a total of 32 matches, divided between the two channels on an even/odd match basis. The Final, on June 30th 2002, will be broadcast live on RTR. RTR will show the majority of its matches live. It serves not only viewers in Moscow, but also audiences in the Far Eastern regions of Russia who live in different time zones. Oliver Seibert, Head of Television at KirchSport, said, "We are very pleased to announce these deals - Portugal and Russia were the last of the qualifying nations to reach an agreement on television coverage for the 2002 event, so this is an important moment for us." KirchSport -- www.kirchsport.com --, with headquarters in Zug, Switzerland, employs 80 people and holds operations in London and Switzerland. Fully-controlled subsidiary companies of Kirchsport include the two rights holding entities for the 2002 and 2006 FIFA World Cup broadcast rights - KirchMedia WM AG and KirchMedia WM GmbH - as well as Host Broadcast Services (HBS), the company responsible for staging the production of the 2002 FIFA World Cup. Contact Information: KirchSport AG John Kristick Telephone: +41-41 723 1515 john.kristick@kirchsport.com MOBILCOM AG: Cautions Parent Against Forcing It Into Insolvency --------------------------------------------------------------- Feisty MobilCom founder and CEO Gerhard Schmid threatened last week to exercise his put option against France Telecom if it forces the German mobile phone subsidiary into insolvency. Mr. Schmid's warning comes as the deadline for its 3G rollout nears, which needs a EUR4.7 billion funding from the French incumbent. The chief, who has been at odds with France Telecom over investment decisions, claims the latter cannot back out from this contractual obligation. The financing package is due by end of July and analysts posit a failure by France Telecom to honor this obligation could force the company into insolvency, says AFX News. Some observers are beginning to suspect that the French group has insolvency in mind. This is bolstered by the fact that it has not yet moved forward with its plan to takeover the 49% stake held by the family of Mr. Schmid. Originally, France Telecom was supposed to seal a deal with the MobilCom chief at the end of April, but until now there's no word when this deal will be consummated. A consortium of banks -- thought to include Deutsche Bank AG, ABN Amro, Merrill Lynch and Societe Generale -- was supposed to buy and hold the stakes for France Telecom temporarily or until the latter is ready to consolidate MobilCom's debt into its own books. This arrangement, however, had been stymied by the German securities regulator, which hinted a possible disapproval of the plan, as it illegally circumvents a German takeover law. Many believe France Telecom cannot afford to absorb MobilCom's debts at this time because of its own EUR60 billion bill. The German mobile phone unit has debts of about EUR6-7 billion. SEEHAFEN ROSTOCK: Fitch Downgrades Unsecured Rating to 'B-' ----------------------------------------------------------- Fitch Ratings downgraded Friday the senior unsecured rating of Seehafen Rostock GmbH (Rostock) to 'B-' from 'BB'. The rating has been put on Rating Watch Negative. This action follows statements by the company to the effect that it is seeking negotiations with its bondholders to change certain terms and conditions of the EUR50 million bond due 2009. Rostock has 150 days from 31 December 2001 to deliver to the bond trustee a compliance certificate showing that fiscal-year 2001 (FY01) financial covenants have been met. It is likely that certain financial ratios have been breached and, given recent operating performance, higher ratio thresholds for subsequent calculations periods is one of the areas for discussion with bondholders. The rating level and Rating Watch Negative status reflects the uncertain outcome of negotiations with bondholders should they chose not to accept prospective proposals. CONTACT: Fitch Ratings John Hatton, +44 (0)207 417 4283 Trevor Pitman, +44 (0)207 417 4280 James Jockle, 212/908-0547 (Media Relations) TELESENSKSCL AG: Billing Components Unit in Management Buyout ------------------------------------------------------------- As part of its restructuring program initiated in 2001, TelesensKSCL AG -- http://www.TelesensKSCL.com-- has now sold its Billing Components activities to senior staff of this business unit in an MBO (Management Buy Out). The transaction was concluded in the form of an asset deal with economic effect as of January 1, 2002. In the deal, TelesensKSCL initially obtains around EUR 1.25 million and will further participate in a positive trading-volume with Billing Components software. With the sale of the Billing Components unit and as part of the overall restructuring plan, TelesensKSCL will now focus solely on its core-competence, namely, the development and implementation of billing solutions for tier 1 and tier 2 telecommunication companies. Investor Relations Nina von Moltke E-mail: investor@telesenskscl.com TelesensKSCL AG, Global Solutions Ferdinand-Porsche-Strasse 1 51149 Cologne Telephone: +49 2203 91 28 888 Fax: +49 2203 91 28 150 ========= I T A L Y ========= FIAT SPA: Premier Hints Aid to Solve Crisis at 'Important' Firm --------------------------------------------------------------- Italian Prime Minister Silvio Berlusconi does not rule out a government bailout for Fiat SpA, one of the country's oldest and most profitable industrial groups, says BBC News. "The government is available to examine the possibility of taking measures for Fiat," Mr. Berlusconi was quoted by the British broadcaster as saying last week. The veiled assurance came as the company bared more than half-a- billion losses in the first quarter, reversing a EUR193 million net income for the same period the year before. The group now plans, among others, to layoff 2,800 workers at Fiat Auto, its loss-making car unit, which posted an operating loss of EUR429 million for the quarter compared to only EUR16 million last year. Italy's Labor Minister Roberto Maroni and Fiat executives were expected to meet last Friday. Union leaders have threatened industrial actions as result of the decision to shed workers, says BBC News. "Fiat is the most important privately held company in Italy, and therefore we sincerely hope that Fiat...will be able to recover quickly," the Prime Minister said. Mr. Berlusconi clarified, though, that any bailout would be conditional to ensure that "such actions don't violate free market competition." FIAT SPA: Iveco Mulls Partnership With Competitor to Survive ------------------------------------------------------------ The commercial vehicles arm of slumping industrial group Fiat SpA is open to the idea of linking up with an outside partner to weather the storm that has recently hit the group, says Dow Jones Newswires. Michel De Lambert, chief executive of Iveco, which manufactures light vehicles and trucks, among others, has raised the possibility of pairing with Germany's MAN AG, Sweden's Scania AB or U.S.-based Paccar Inc. Although the unit adopts a "stand-alone strategy," this does not necessarily mean that it has no plans of "[getting] married," Mr. De Lambert told the newswire. He pointed out that consolidation in the truck sector has been a hot topic; hence, it is not unusual for the unit to forge its own deal. Last year, Volvo acquired the commercial vehicle operations of Renault, says the newswire. The recent half-a-billion loss absorbed by Fiat during the first quarter has rendered uncertain the future of some units, particularly the automobile arms. ===================== N E T H E R L A N D S ===================== LANDIS GROUP: Westcon Completes Landis Transaction -------------------------------------------------- Westcon Group, Inc., a global channel provider of networking and telecommunications technology products, announced Wednesday that the Netherlands Court has approves Westcon's to assume the employees and fixed assets of the former Business Partners distribution division of bankrupt company Landis Group NV. Westcon Group did not disclose the financial terms of the closing. Westcon Group has assumed the networking distribution operations of Landis in nine (9) countries in Europe. These countries include Austria, Belgium, Denmark, France, Germany, Netherlands, Norway, Spain and Sweden. This transaction effectively makes Westcon Group one of Europe's largest voice and data networking distributors, and completes phase one of the company's strategy towards increasing its global footprint. Each of the former Landis divisions will operate under the Westcon or Comstor divisional brands of Westcon Group, depending on the local countries' vendor product lines and market focus. This is consistent with the Westcon Group's vendor-focused distribution philosophy, which aligns core vendor and distributor competencies, ultimately enhancing Westcon Group's ability to deliver a greater value proposition to its customers. Westcon Group, Inc. is a global channel provider of networking technology. Through its divisions, Westcon, Comstor and Voda One, the company offers products and services for convergence technology, remote access, Internet and e-business, virtual private networks, videoconferencing, wireless connectivity and network security. Westcon Group, Inc., is located at 520 White Plains Road, Suite 100, Tarrytown, NY, USA 10591-5167; tel.: 914 829-7170; fax: 914 829-7137; www.westcongroup.com. LAURUS NV: Euronext Suspends Retail Group's Official Listing ------------------------------------------------------------ Following a press release dated March 20, 2002, wherein Laurus N.V. announced that it had an equity deficit, on the same day, Euronext Amsterdam N.V. said that meantime, it would not impose a listing measure, since Laurus had started a reorganization that would result in positive shareholders' equity within the foreseeable future. At the time, Euronext Amsterdam and the food retail company agreed on a timetable for the reorganization, with strict deadlines. Laurus subsequently informed Euronext Amsterdam that one of the deadlines would not be met, i.e. the signing of definitive agreements between the parties involved in the reorganization by May 15, 2002. For this reason, the management of Euronext Amsterdam has decided that with effect May 17, 2002 it will impose suspension the group's official listing. The imposition of the listing measure does not imply any judgement regarding the feasibility of the reorganization at Laurus. =========== P O L A N D =========== NETIA HOLDINGS: To Fulfill Contractual Obligations to Telia ----------------------------------------------------------- Netia Holdings S.A., Poland's largest alternative provider of fixed-line telecommunications services, announced Friday that one of its subsidiaries, Netia Telekom S.A., had received notice from Telia International Carrier AB that Telia was of the opinion that the Agreement for the Provision of Ducts made between Telia's subsidiary, Prima Communications Sp. z o.o., and Netia Telekom S.A. has expired due to the non-fulfillment by April 15, 2002 of all of the conditions specified in the agreement. Telia also indicated its interest in continuing discussions with Netia regarding the utilization of Netia's backbone network. Netia Telekom S.A. believes that the conditions to which Telia International Carrier AB refers were reserved on Netia Telekom S.A.'s behalf, and therefore the existing agreement remains valid and does not require the execution of an additional agreement. Netia Telekom S.A. intends to undertake the necessary steps with an aim to fulfill the agreement. CONTACT: Netia IR: Anna Kuchnio, +48-22-330-2061 Media: Jolanta Ciesielska, +48-22-330-2407 or Taylor Rafferty, London Jeff Zelkowitz, +44-(0)20-7936-0400 or Taylor Rafferty, New York Andrew Saunders, 212/889-4350 TELEKOMUNIKACJA POLSKA: Q1 Profit Slips 84%, But Still in Black --------------------------------------------------------------- Eastern Europe telecom giant Telekomunikacja Polska SA reported last week an 84% drop of net profits for the first quarter, but managed to keep the figure printed in black. The dominant telecom operator had net profit of only PLN121 million, well below expectations of analysts who had earlier forecast a PLN231 million gain. According to Reuters, this poor performance reflects the stagnating fixed-line business, the company's main earner. Analysts say the opening of the long-distance service to greater competition is partly to blame for this stagnation. This service was opened to other players beginning last year. The international calls market will similarly be freed up starting January next year. The group, for its part blamed escalating costs, which in the first quarter rose 91% to PLN754 million. This impacted revenues, which had gained a modest 4.3% to end at PLN4.38 billion. "The low net results are due to...increased financial costs, but we feel very confident that already in the second quarter we should be back on track," TPSA deputy CEO Bertrand Le Guern told analysts and reporters during a conference call last week. Mr. Le Guern predicts revenues to rise 8% for the year, an ambitious forecast, according to some analysts. This growth will be fueled by the mobile phone division, which has consistently gained new customers. For the first quarter alone, the company signed up 386,000 new subscribers to its GSM operator Centertel. "We definitely plan to exceed our target of a 31 percent market share in 2002," Mr. Le Guern told Reuters, adding that Centertel now controlled 29.3 percent of the 10 million-client market. Meanwhile, the deputy chief says the group is continuing negotiations with banks regarding the waiver of the threshold for its debt to earnings ratio contained in its debt covenants. Violation of these covenants will force the company to pay nearly PLN13 billion of long-term debts this year. Already, the company's ratings are on watch for possible downgrade due to the threat of a covenant breach. If this happens, the company would be in serious trouble, as it currently shoulders PLN14.6 billion of debt, with little money to spare. "This ratio may be above 2.5 percent [threshold] at the end of June, but according to our estimates it should drop to 2.1 by the end of the year," Mr. Le Guern told Reuters. "We have been and continue to be extremely active in discussions on the waiver proposal, solving the potential breach of covenant. And I believe that we will obtain a waiver and a positive outcome in the first days of June," he added. =========== S W E D E N =========== ADCORE AB: Buys 60 Properties From Wihlborgs for SEK 1.2 BB ----------------------------------------------------------- Wihlborgs is continuing to concentrate its business and is selling 60 properties in 37 locations to Adcore for SEK 1,256 million. The sale, involving a total of around 250,000 m squared of lettable area, covers the greater part of Wihlborgs' property stock outside the prioritised markets of the Stockholm and Oresund regions. The majority of the properties sold formed part of Postfastigheter, which was acquired by Wihlborgs in December 2001. It is estimated the sale will be completed by August 2002, and the profit will amount to SEK 60 million. The transaction is conditional upon a decision regarding a new share issue at a special general meeting in Adcore on 18 June 2002. Wihlborgs is guaranteeing SEK 100 million of a total SEK 253 million in the new share issue. "The sale means we are speeding up the implementation of our strategic plan regarding concentration on Stockholm and Oresund," commented Erik Paulsson, President and CEO of Wihlborgs Fastigheter AB. "We can now put further energy into improving the property stock and rationalizing the administration on our prioritized markets," continues Erik Paulsson. After the sale, Wihlborgs' property stock will comprise a total of 575 properties 228 of them in the Stockholm region, 329 in the Oresund region and 18 in other locations. 54% of the rental value will be in the Stockholm region, 44% in the Oresund region and 2% in other locations.(1) On the basis of the current rent, property and administrative expenses, financial items, the profit from the property sale, and tax, it is estimated the sale will affect Wihlborgs' net profit for 2002 by SEK 15 million or SEK 0.05/share. As a result of the sale, the balance sheet total will decrease, which as of March 31, 2002 means an increase in equity/assets ratio of 0.6 % to 24.8 %. Contact Information: Erik Paulsson President and CEO Telephone: +46 8-555 148 18 +46 733-87 18 18 Mats Berg Communications Manager Telephone: +46 8-555 148 20 +46 733- 87 18 20 (1) Based on changes with regard to the property stock as of 31 March2002. Appendix: Summary of properties acquired: Region Municipality Property Category Area, sqm Other ALINGSAS TYGVAVAREN 4 Office 1,170 OTHER BOLLNAS GARDET 6:4 Ind/Wa 2,248 reh OTHER ENKOPING S:T ILIAN 23:4 Ind/Wa 1,692 reh OTHER ESKILSTUNA ESKILSHEM 1:8 Retail 3,540 OTHER ESKILSTUNA NOTKNAPPAREN 24 Office 2,264 OTHER ESKILSTUNA VALHALLA 2:19 Office 1,872 OTHER ESKILSTUNA VAGSKALEN 24 Other 3,437 OTHER ESKILSTUNA VALPEN 3 Ind/Wa 4,134 reh OTHER FALUN HATTMAKAREN 15 Office 2,704 OTHER FALUN KARDMAKAREN 21 Reside 6,278 nt. OTHER FALUN SPARBANKEN 7 Office 2,804 OTHER FALUN HATTMAKAREN 16 Office 4,064 OTHER GAVLE BRYNAS 12:1 Ind/Wa 5,934 reh OTHER HALMSTAD KILOT 1 Ind/Wa 6,959 reh OTHER HEBY KAPELLET 23 Retail 571 OTHER HARNOSAND TULLEN 10 Office 4,607 OTHER KALMAR FREDRIKSDAL 1 Ind/Wa 3,498 reh OTHER KALMAR GULDFISKEN 2 Office 3,029 OTHER KARLSBORG POSTILJONEN 1 & 2 Retail 1,216 OTHER KARLSKRONA INGENJOREN 7 Ind/Wa 1,818 reh OTHER KARLSTAD GANGJARNET 2 Ind/Wa 3,536 reh OTHER KARLSTAD TORNADON 2 Ind/Wa 12,804 reh OTHER KARLSTAD SKEPPAREN 15 Office 22,371 OTHER KARLSTAD MONITORN 9 Office 3,409 OTHER KATRINEHOLM NEJLIKAN 13 Retail 2,524 OTHER KRISTIANSTAD KRISTIANSTAD 5:56 Ind/Wa 2,154 reh OTHER KRISTINEHAMN UROXEN 14 Ind/Wa 3,262 reh OTHER KOPING DROTTEN 2 Office 3,601 OTHER LINKOPING BREVDUVAN 17 Office 7,753 OTHER LULEA DJURET 3 Ind/Wa 6,739 reh OTHER LULEA RATTAN 18 Office 4,319 OTHER LYCKSELE STADSHUSET 7 Retail 2,075 OTHER MARK KYRKANGEN 9 Office 653 OTHER NORRTALJE PELIKANEN 8 Office 5,712 OTHER NORRTALJE JARNLODET 15 Office 3,552 OTHER NYKOPING BAGAREN 20 Office 1,932 OTHER NYKOPING SKOLDEN 2 Office 2,027 OTHER NYKOPING SAVEN 4 Ind/Wa 1,853 reh OTHER NASSJO BREVET 1 Ind/Wa 4,561 reh OTHER NASSJO POSTEN 1 Office 3,153 OTHER OXELOSUND BJORKEN 11 Reside 3,510 nt. OTHER SANDVIKEN SATERJANTAN 3 Ind/Wa 933 reh OTHER SUNDSVALL BORGMASTAREN 10 Office 5,161 OTHER TORSBY VASSERUD 3:13 Ind/Wa 3,334 reh OTHER UDDEVALLA RAN 6 Ind/Wa 2,482 reh OTHER UMEA STIGBYGELN 2 Ind/Wa 3,829 reh OTHER UMEA VALE 6 Retail 4,420 OTHER UPPSALA BOLANDERNA 21:4 Office 8,541 OTHER UPPSALA BOLANDERNA 21:5 Retail 3,384 OTHER UPPSALA KVARNGARDET 30:2 Retail 4,107 OTHER UPPSALA KUNGSANGEN 10:1 & Office 8,649 10:2 OTHER VETLANDA LEJONET 14 Reside 1,880 nt. OTHER VARNAMO TRE LILJOR 16 Office 1,258 OTHER VASTERVIK BRYGGAREN 18 Retail 2,504 OTHER VASTERAS KOL 13 Office 4,434 OTHER OREBRO KITTELN 11 Retail 12,843 OTHER OREBRO OLAUS PETRI 3:119 Ind/Wa 8,809 reh OTHER OSTERSUND SNACKAN 25 Ind/Wa 3,425 Reh 245,330 ADCORE AB: Creates New Property Corporation, Renames Company ------------------------------------------------------------ Adcore AB has reached agreement regarding the acquisition of a property holding from Wihlborgs Fastigheter AB, the web development consultancy group announced Thursday. Coincident with this transaction, Adcore will shift business orientation, and change its corporate name to Klovern AB (Klovern). Adcore's current consulting business, pursued through wholly owned subsidiary Adcore Consulting AB, will be re-named Connecta, transferred to its shareholders and quoted on alternative marketplace Nya Marknaden. Shareholders with a total of 40% of Adcore's shares have agreed to vote in favor of the proposed transaction. A significant alteration of market conditions has prevented Adcore from realizing the expansion strategy initiated through the merger between information Highway and Connecta. Adcore has effected several rationalization programs since this merger, intended to adapt business to prevailing market conditions and achieve profitability. These measures included the liquidation or divestment of all foreign business. Operations have been concentrated on the Stockholm office, with a radical improvement in earnings. As a consequence of the deal announced today, Adcore will be able to concentrate its efforts on improving profitability and cash flow from a stable financial base. The Board considers that this deal will provide the consulting business with satisfactory working capital. Klovern will exploit the imbalance from the property market, with many of the biggest real estate corporations concentrating their holdings on Sweden's major city regions. This situation has implied that real estate located outside these regions can be acquired at required property yields that generate high returns on equity in historical terms. Klovern intends to operate aggressively, acquiring, developing and divesting high-yielding real estate, with the intention of maximizing Klovern's return on equity. Klovern will pursue a shareholder-friendly dividend policy. Assuming approval at the Extraordinary General Meeting to be held on June 18, 2002, several transactions will be consummated. Their essential features follow: - Klovern will effect a reverse split with every 250 shares becoming one share through a change in the nominal value of shares. Shareholders will submit shares, without compensation, for all shareholders to attain holdings in even multiples of 250 shares. This process will be automatic and will not necessitate any shareholders taking any action. The reverse split will have been consummated before the planned new issue. - Klovern will effect a preferential rights issue with each existing share conferring the rights to subscription for ten new low-vote class B shares with a nominal value of SEK 11. In total, Klovern is expected to raise some SEK 253 million before issue expenses. This issue has been secured in its entirety by a guarantee consortium composed by Hagstr"mer & Qviberg Fondkommission AB. The consortium includes, among others, certain major Klovern shareholders, Catella, Investment AB Tresund and Wihlborgs. - By means of a reduction to Klovern's share capital, all subsidiary shares can be transferred to existing shareholders through application of the Swedish legal precedent known as Lex Asea. Each Klovern share will confer the right to one share in Connecta. - Klovern will issue a convertible debenture, with subscription rights assigned to Connecta. Payment for this instrument will comprise Connecta's receivables from Kl"vern. The nominal amount is SEK 50 million, with 6,25% interest and a two-year term. The conversion price (class B shares) will be SEK 11. - The intention is for Connecta to be listed on the alternative marketplace Nya Marknaden on or around August 15, 2002. At a later stage Connecta will apply for a listing on the Stockholmsb"rsen O-list. Connecta's business concept is to assist corporations and other organisations to realise their desired results by combining Management and IT competencies. At present, Connecta has some 500 staff, possessing a broad range of expertise, which together constitutes a professional provider of consulting services to corporations and other organisations. Connecta consultants have what is termed the "T profile"-broad- based business understanding and in-depth skills within one or more specialist segments. Connecta's primary competitive edge lies in its ability to combine strategy, business know-how and IT to achieve optimal solutions for its clients. During spring 2002, Connecta's order backlog consolidated further, particularly in the enterprise applications and systems integration segments, where primarily, assignments are based on rationalization. Sales in the first quarter 2002 were SEK 112 million; operative earnings from the consulting business were SEK 1.1 milllion. Further measures are now being taken to assure a minimum margin of 5% for the short term, and to achieve a positive cash flow. Measures including further cost-cutting programs will be implemented, overheads will be cut, a new salary model with increased non-fixed elements will be introduced, while management salaries will be reduced. The objective is to grow organically in selected segments, and to continue hiring senior consultants with specialist expertise. For the long term, the objective of a minimum operating margin of 10% over a business cycle has been retained. Ole Oftedal, Adcore's current CEO, will remain as CEO of Connecta. The executive management will also include Deputy CEO/COO Johan Wieslander and Deputy CEO/CFO Sten Wranne. Connecta's Board will consist of Lars Evander (Chairman), Lars Carlqvist, Anders Liljeblad and Ole Oftedal (CEO). Klovern's business concept is to maximize returns on equity by actively acquiring, developing and divesting properties on the Swedish real estate market. Stefan Dahlbo has been proposed as Klovern's Chairman. The other proposed Board members are: Lars Evander, Ole Oftedal and Erik Paulsson. Klovern's first acquisition is a real estate holding for SEK 1,256 m from Wihlborgs. This acquisition will be financed through bank borrowings, a promissory note and part of the funds raised from the aforementioned share issue. The holding is concentrated on six major central Swedish conurbations (54% of floor-area, totalling approx. 246,000 sq m). The holding primarily comprises centrally located commercial premises, primarily offices and retail premises, in these towns. The majority of the holding comprises properties obtained in Wihlborg's acquisition of Postfastigheter (postal real estate) in autumn 2001. Holdings in the 15 largest locations generate over 80% of total rental revenues. This acquisition is being effected at a current property yield of 9.2%. Klovern will operate actively, acquiring large, geographically diverse property holdings, providing they satisfy Klovern's earnings and quality requirements. Klovern perceives many promising opportunities to acquire additional property holdings and expects to make further acquisitions during the current financial year. Similarly, property trading will be a significant part of business; Kl"vern intends to sell parts of its acquired holding. This transaction implies that Adcore's tax loss carry-forwards may be utilized by the new property company. Preliminary schedule: - EGM: June 18, 2002 - Record date for reverse split: June 24, 2002 - Record date for new issue and transfer of Connecta through a reduction of share capital: June 27, 2002 - Issue prospectus for Klovern and listing prospectus for Connecta published: June 27, 2002 - Application period: July 2, 2002 to July 22, 2002 - Connecta will be listed on alternative marketplace Nya Marknaden on August 15, 2002 Conditions: Approval by the Extraordinary General Meeting; Securing the necessary loan financing. Advisors Catella Corporate Finance AB and Hagstromer & Qviberg Fondkommission AB are Adcore's corporate advisors on these transactions. Adcore is a consulting practice that assists corporations and non-profit organisations to realise their desired results by combining management and IT competencies. Adcore's shares are quoted on the OM Stockholm Stock Exchange O list (Ticker ADCO.ST). Ole Oftedal is Adcore's CEO, Lars Evander is Chairman. For more information, please contact: Ole Oftedal Chief Executive Officer Telephone: +46 (0)8 635 8404 +46 (0)70 592 7599 Email: ole.oftedal@adcore.com Frans Benson Corporate Communications Telephone: +46(0)8 635 8054 Email: frans.benson@adcore.com LM ERICSSON: Selected by Tunisie Telecom For ENGINE Solution ------------------------------------------------------------ Ericsson announced Friday an ENGINE contract with Tunisie Telecom in Tunisia. ENGINE will serve as a platform for the network expansion, modernizing Tunisie Telecom's existing network and facilitating migration to a next generation network. Ericsson will deliver telephony servers, media gateways, multi- service core switches, access ramps, the OSS (Operating Support System) management, and billing gateway. The contract also includes network design, implementation and customer support. Initially the new ENGINE solution will be used by Tunisie Telecom to offer its customers voice and ISDN services, but in the near future a full range of broadband service can be offered. Implementation of the voice and ISDN services are planned for completion by the end of the year. This is the third ENGINE contract Ericsson has announced this year in the African region. Earlier this year, both Transtel of South Africa and Telecom Egypt signed ENGINE solution agreements. ENGINE can combine voice, data, video and Internet traffic on a single network, resulting in lower operating costs and expanding the range of information, services and applications available to end-users. Ericsson is shaping the future of Mobile and Broadband Internet communications through its continuous technology leadership. Providing innovative solutions in more than 140 countries, Ericsson is helping to create the most powerful communication companies in the world. Read more at http://www.ericsson.com/press About Tunisie Telecom Tunisie Telecom, the only operator in Tunisia, is operating both fixed and mobile networks serving a population of about 10 million people. The penetration of fixed lines is about 11%, 1.1 million lines, and more than 390 000 subscribers are today using the mobile systems. The monopoly situation will end during this year since a second license to operate a mobile network has been awarded. For additional information about Tunisie Telecom go to: http://www.tunisietelecom.net/ About ENGINE ENGINE is Ericsson's global multi-service network offering for operators of fixed networks, designed for real-time services; a carrier-class network able to carry large and growing volumes of IP-based traffic. The ENGINE concept efficiently builds new and migrates operators' current circuit-switched networks into a single next generation network, based on ATM and IP packet switching technologies. Ericsson's access portfolio comprises of end-to-end solutions and access technologies like copper, fiber Ethernet and wireless technologies. Please visit: http://www.ericsson.com/broadband CONTACT: Ericsson Kathy Egan, 212/685-4030 Email: Pressrelations@ericsson.com or Glenn Sapadin, 212/685-4030 Email: Investor.relations@ericsson.com LM ERICSSON: Ericsson Will Supply T-Mobile With MMS Technology -------------------------------------------------------------- Telefonaktiebolaget LM Ericsson and T-Mobile International signed a general agreement for the delivery and integration of MMS technology for the T-Mobile group. Ericsson is selected by T-Mobile to supply and install Multimedia Messaging technology in their GSM/GPRS/UMTS-network. After the successful launch of MMS by Westel in Hungary (an affiliate of T-Mobile International), T-Mobile plans to roll out MMS in Germany, Austria and the UK this summer with more countries to follow. Core of the network MMS ability is the Multimedia Messaging Service Center (MMS-C). The MMS-C is the essential part of the network to administer, store, transmit and transform the multimedia messages and create billing data. "We look forward to helping T-Mobile introduce Multimedia Messaging and open the door to multimedia services for consumers," says Ingvar Larsson, Vice President and General Manager of Ericsson Service Network and Applications. "This partnership is an integral element of T-Mobile's commitment to mobile data. Messaging is predicted to be hugely popular and will play a key part in accelerating the adoption of these services in the mass market," says Hamid Akhavan, European CTO, T-Mobile International. MMS offers an increase in mobile-to-mobile messaging capabilities by enabling colour pictures, animations, audio and video clips to be sent along with text. This opens the door to content-rich applications and services such as electronic postcards, animated cartoons and multimedia presentations. T-Mobile International, one of Deutsche Telekom AG's four strategic divisions, is one of the world's leading international mobile communications providers. Deutsche Telekom' subsidiaries and affiliated companies today serve more than 67 million mobile customers worldwide. T-Mobile is the first transatlantic mobile communications provider utilizing the digital GSM wireless technology standard. For more information about T-Mobile International, please visit www.t- mobile.com. Ericsson, a forerunner in MMS - In March 2001, Ericsson sent out the world's first multimedia message. - In January 2002, Ericsson won the contract from the world's largest global operator Vodafone for their global MMS rollout. - In May 2002, Ericsson and Westel, the Hungarian operator, launched the world's first commercial, full-scale Multimedia Messaging Services. - In China, Ericsson and Chongqing Mobile, the subsidiary of CMCC, sent out the first multimedia message based on the current GPRS network. - Ericsson has more than 80 MMS trial systems around the world - Ericsson has won more than 20 commercial MMS contracts LM ERICSSON: Licenses GPRS Platform Solutions to Microcell ---------------------------------------------------------- Ericsson Mobile Platforms and Microcell have entered a license agreement, where Microcell gets access to Ericsson's mobile phone technology platform. The license agreement announced Thursday enables Microcell to develop mobile handsets based on Ericsson Mobile Platforms' solutions. A complete range of hardware and software platforms for triple- band GSM/GPRS, 2.5G/GPRS and EDGE mobile phone technologies are covered in the agreement. The combined knowledge of Ericsson and Microcell strengthen the position for Ericsson Mobile Platforms as technology supplier and for Microcell as ODM (Original Design Manufacturer) supplier to the mobile phone market. "We view this cooperation as an important step for us to keep a complete and state-of-the-art technology available for short product development cycle, which are one of our key elements in our competitive edge, " says Anders Torstensson CEO of Microcell. "Ericsson is the leading mobile phone technology provider and we have a strong trust in the platform solutions from Ericsson Mobile Platforms and we are very satisfied with this cooperation." "We are confident that this cooperation will be of mutual benefit for both companies," says Tord Wingren, President of Ericsson Mobile Platforms. "We believe that Microcell's strength in product finalization will make them a good partner to bring our platform technology to the market." The market is going through a paradigm shift from a few complete suppliers of mobile phones to a chain of specialized companies, similar to the PC industry. Ericsson holds the world's largest portfolio of 2.5G and 3G Intellectual Property Rights. Part of this portfolio is now offered to the market through Ericsson Mobile Platforms, positioning Ericsson as a leading supplier of the core handset technology. Ericsson is shaping the future of Mobile and Broadband Internet communication through its continuous technology leadership. Providing innovative solutions in more than 140 countries, Ericsson is helping to create the most powerful communication companies in the world. Ericsson made an early strategic decision to accelerate the wireless industry. On September 1, 2001, Ericsson Mobile Platforms was formed as a fully operational company to offer its complete 2.5G and 3G platform solutions to all manufacturers of mobile phones and wireless information devices on the open market. Ericsson Mobile Platforms offers one of the fastest routes for manufacturers to launch new GPRS or 3G products with limited R&D and resources, allowing them to focus on areas of product differentiation, including applications, industrial design, distribution and branding. For more information about Ericsson Mobile Platforms' wireless communications technology, please see www.ericsson.com/mobileplatforms Microcell focus its competence in wireless technology, to assist OEM's (Original Equipment Manufacturer) and other wireless enterprises, such as PDA manufacturer, industrial modules manufacturer, contract manufacturer and software entities to design, develop and produce wireless devices, based on the clients specification and brand. Microcell is a private owned company established in the end of 1997, headquartered in Oulu Finland and with branch offices in Kuopio, Espoo, Turku and Raahe in Finland, Dallas and San Jose in the U.S., and Copenhagen in Denmark. With 300 wireless technology professional employees, the company is in a leading position in the growing ODM business of wireless technology. Contact Information: Kathy Egan Vice President, Communications Telephone: 212 685-4030 Email: Pressrelations@ericsson.com Glenn Sapadin Manager, Investor Relations Telephone: 212 685-4030 Email: Investor.relations@ericsson.com SONG NETWORKS: Moody's Doubts Ability to Restructure Debts ---------------------------------------------------------- Moody's pushed Song Networks Holding A.B. down to Caa3 from Ca last week, following its announcement to restructure its debts, which the agency believes will increase loss severity to par bondholders. The ratings agency assigned the company a negative outlook, clouding some US$537.9 million of debt securities. These are now the new ratings of the company: - Senior implied rating at Ca - Unsecured issuer rating at Ca - US$150 million 13% senior notes due 2009 at Ca - EUR100 million 13% senior notes due 2009 at Ca - EUR150 million 11.875% senior notes due 2009 at Ca - EUR175 million 12.375% senior notes due 2008 at Ca "Moody's recognizes that Song has limited time to achieve a consensual agreement with bondholders absent of exhausting limited cash resources," the agency said in a press statement. Moody's estimates Song's cash resources to be just enough to fund the business until end 2002 or early 2003. Song Networks, formerly Tele1 Europe, is an expanding data, Internet and telecommunications operator with activities in Sweden, Denmark, Finland and Norway. The company provides broadband solutions for data, Internet and voice, to large and mid-range businesses in the Nordic region. For more information, contact: London Carlos Winzer Senior Vice President European Corporate Finance Moody's Investors Service Ltd. Telephone: 44 20 7772 5454 London Michael West VP - Senior Credit Officer European Corporate Finance Moody's Investors Service Ltd. Telephone: 44 20 7772 5454 =========================== U N I T E D K I N G D O M =========================== BIG FOOD: Nears Deal With Axa Over Sale-and-leaseback Plan ---------------------------------------------------------- Debt-laden frozen food specialist Big Food Group is reportedly close to sealing a deal with Axa Real Estate, the property arm of insurance giant Axa, over a sale-and-leaseback arrangement. According to Knight-Ridder Business News, the company will receive GBP250 million for 64 stores, including offices and distribution centers, which Axa will then lease back. The company is currently saddled by debts of about GBP430 million as a result of an ambitious, but disastrous foray into organic food in 2000. The proceeds from the deal with Axa will be used to partly offset this debt as well as fund expansion programs during the next three years. The parties have yet to confirm this report, says the news outfit. Accordingly, there are other bidders trying to put a similar, but better deal. Just a month ago, it was rumored that British Land was ready to pay GBP350 million for the bulk of the group's 760 stores. Both sides have denied the buzz. A spokesman for the group only told Knight-Ridder that it is in talks with an entity over refinancing plans "that are to be completed by September." The company's prospects turned gloomy in 2000 when founder and CEO Malcolm Walker entered the organic foods business, which proved incompatible with its cost-conscious consumers. Things further turned sour when it was learned later in December that Mr. Walker had cashed in GBP13.5 million worth of shares weeks before the share price collapsed on news of weak sales. The Financial Services Authority formally censured the company in late April for failing to make shareholders sufficiently aware of the group's performance. Last week, the company's shares hovered just above 90p from a high of 340p in early January, says the news agency. Analysts believe the Axa deal will provide the stimulus for the group's financial turnaround. BOOKHAM TECHNOLOGY: Components Manufacturer Names New VP -------------------------------------------------------- Bookham Technology plc -- www.bookham.com --, a leading provider of optical components for fiber optic communication networks, appoints Diane Wotus as vice president of ASOC manufacturing. Ms. Wotus joins Bookham with over 20 years experience in technology manufacturing in wafer fabrication and rigid disc manufacturing, from the U.S. Diane comes to Bookham from Read-Rite Corp, Fremont, CA., one of the world's leading independent manufacturers of magnetic recording head assemblies for disk and tape drives, where she has been senior director, wafer fab manufacturing from 1999. Prior to this Diane worked from 1991 to 1998 for StorMedia Incorporated, Santa Clara, CA., in various positions terminating with that of vice president, operations. Diane was integral to the growth of the manufacturing operations division, which doubled in revenues over a one year period. Diane holds a bachelor of science in Chemical Engineering/Engineering & Public Policy from Carnegie-Mellon University, Pittsburgh, PA. Steve Abely, chief financial officer of Bookham Technology plc, commented. "Diane will be assuming full responsibility for all ASOC manufacturing operations. I believe Diane will be a great addition to our team and will provide leadership in instituting a process focus and discipline into the ASOC manufacturing operations. We believe we have shown ASOC to be the leading semiconductor process for integrating multiple optical functions on a single silicon chip and, as our ASOC-based products now start moving to the high-volume manufacturing stage and cost- reduction stage, Diane's experience in wafer fab and disk drives will be extremely valuable." Bookham Technology designs, manufactures and markets integrated multi-functional active and passive optical components using high volume production methods. Using patented silicon-based ASOC, Gallium Arsenide and Indium Phosphide technologies, the company provides end-to-end networking solutions that offer higher performance and greater systems capability to communications network system providers. The company, whose securities are traded on Nasdaq and the London Stock Exchange, is headquartered in the U.K., with offices and manufacturing facilities in the U.S. and U.K., and has additional offices in France, Italy, Japan and China. The company employs approximately 850 people worldwide. BRITISH ENERGY: Uncertain Domestic Outlook Triggers Downgrade ------------------------------------------------------------- The weakening condition and the uncertainty of the domestic operations of British Energy Plc has prompted Moody's to cut its senior unsecured debt ratings to Baa2 from A3. Approximately US$595.9 million of debt securities were impacted by the move, according to a press statement released by the ratings agency. The outlook of the company remains negative. "The downgrade is based on the deterioration in the overall financial performance of BE's domestic operations and uncertain prospects for any marked improvement in the medium term. This is only partially offset by the expected positive development of BE's North American investments. The negative outlook reflects, among others, continuing uncertainties in relation to the development of the U.K. performance as well as certain execution risks," Moody's said. The ratings agency noted that the U.K. operation is loss-making and doesn't have any clear sign of breaking through in the medium term. This is partly due to the historic drop in power prices this year. "Moody's believes there are no compelling reasons for average prices to rise significantly during the next few years given that the market is dominated by sizeable vertically integrated utilities and also because reserve margins continue to be in excess of 25% despite plant mothballing," the statement read. Moody's noted, though, with high regard the GBP150 million cost reduction program implemented by the company and initiatives that greatly improved the operating performance of the U.K. units, including the reliability of its nuclear power stations. But this is hardly enough to improve its business risk profile, which is much greater and its financial profile, which is weaker than that of the vertically integrated utilities in the U.K. who benefit from a strong retail hedge and/or regulated activities. "Moody's notes that there is also the additional burden of bearing the costs of future nuclear liabilities in the absence of any diversification away from generation activities," the agency said. Moody's expects the current financial year to be the most challenging for both the earnings and cash flow points of view, with funds from operations interest cover expected to be well below 3.0 (unadjusted for nuclear liabilities). Based in East Kilbride, Scotland, British Energy is UK's largest electricity generator with an installed capacity of 11,600MW, 9,600MW of which are nuclear. The company has complementary businesses in North America through its AmerGen joint venture in the US and the acquisition of the Bruce nuclear plants in Canada with stakes in a total of 5,900MW of capacity. As per March 2002, the company had a consolidated turnover of around GBP2 billion and its current market capitalization is around GBP1 billion. For more information, contact: London Stuart Lawton Managing Director Corporate Finance Moody's Investors Service Ltd. Telephone: 44 20 7772 5454 London Ralf Wimmershoff Vice President - Senior Analyst Corporate Finance Moody's Investors Service Ltd. Telephone: 44 20 7772 5454 BRITISH TELECOM: Reveals Upbeat Annual Results ----------------------------------------------- BT Group, the restructuring telecommunications firm, Thursday announced positive results for the year. FOURTH QUARTER AND YEAR ENDED MARCH 31, 2002 The BT Group's continuing activities, before goodwill amortization and exceptional items: Fourth Quarter Full Year Ending March 31 Ending March 31 2002 GBP m 2001 GBP m 2002 GBP m 2001 GBP m Group turnover 4,735 4,509 18,447 17,141 EBITDA 1,431 1,478 5,748 5,774 Group operating profit 650 713 2,771 3,082 Net interest charge (301) (396) (1,417) (1,196) Profit before taxation 371 259 1,273 1,763 Earnings per share 2.6p 3.1p 8.8p 19.3p KEY FEATURES OF THE GROUP RESULTS Fourth quarter - Group turnover from continuing activities increased by 5 % to GBP4,735 million - EBITDA for continuing activities before exceptional items decreased by 3 % to GBP1,431 million, with a 9 % improvement in underlying performance excluding additional early leaver costs and the effect of the property sale and leaseback transaction - Profit before taxation from continuing activities before goodwill amortisation and exceptional items increased by 43 % to GBP371 million - Net exceptional charges of GBP2,883 million largely reflect the impairment of goodwill and overseas assets - Capital expenditure on property, plant and equipment additions in continuing operations reduced by 24 % to GBP982 million - Operating free cash flow (EBITDA less capital expenditure) from continuing operations increased by GBP257 million to GBP449 million before exceptional items - Earnings per share from continuing activities before goodwill amortization and exceptional items of 2.6 pence per share decreased by 16 %. Adjusting for the effect of the abnormally low tax charge in the prior year: underlying earnings per share were about 8 % higher Full year - Dividends resumed with a proposed final dividend of 2.0 pence per share - Net debt was GBP13.7 billion at the end of March 2002, below our target range of GBP15 billion to GBP20 billion - GBP5.9 billion rights issue completed in June 2001 The demerger of mmO2 completed in November 2001 and the disposal of interests in Yell, Japan Telecom, J-Phone, Airtel and other businesses raised GBP8.0 billion - Sale and leaseback of our properties to Telereal raised GBP2.4 billion - Group turnover from continuing operations increased by 8 % to GBP18,447 million - EBITDA for continuing activities before exceptional items in line with last year at GBP 5,748 million - Profit before taxation from continuing activities before goodwill amortization and exceptional items down 28 % to GBP1,273 million - Net exceptional gains of GBP753 million include: - profits on disposal of investments of GBP4,389 million including Yell, Japan Telecom, J-Phone and Airtel; and - impairment of goodwill and overseas assets of GBP3,922million - Capital expenditure on property, plant and equipment additions in continuing activities reduced by 20 % to GBP3,100 million - Operating free cash flow (EBITDA less capital expenditure) from continuing operations increased by GBP731 million to GBP2,648 million before exceptional items - Earnings per share from continuing activities before goodwill amortization and exceptional items of 8.8 pence per share compared to 19.3 pence per share in prior year Sir Christopher Bland, BT Group's Chairman, said: "The last year has been a significant one for BT Group. We raised GBP5.9 billion through a rights issue in June, demerged mmO2 in November, unwound our Concert joint venture, and sold assets, including our businesses in Japan and Spain, and Yell for GBP8.0 billion. Debt has been halved from GBP27.9 billion at March 31, 2001 to GBP13.7 billion at March 31, 2002. We have a new Chief Executive, a new Group Finance Director, and our Board has been reshaped. We are focused on meeting our customers' needs profitably, with broadband at the heart of our business. It has not been an easy year but we have taken the hard decisions early and are now in a position of relative strength. We are pleased to announce that we are able to propose a final dividend of 2.0 pence per share." Ben Verwaayen, BT Group's Chief Executive, said: "Our primary objectives are to enhance customer satisfaction and grow BT's business profitably. The strategic plan, which we announced in April, confirmed BT is a single integrated telecommunications company focused on achieving profitable growth. The group's operating results continue to improve. Turnover for the quarter grew by 5 % and underlying profit before taxation was 43 % higher than last year. We begin the new year in a stronger financial position. Our focus will be on improving customer satisfaction, introducing new and innovative services, reducing our costs and managing our cash flow. In this way we will deliver real value to our shareholders and customers." The company's consolidated profit and loss accounts and balance sheet may be viewed at: http://www.groupbt.com/Mediacentre/Archivenewsreleases/2002/q402r elease.htm. BRITISH TELECOM: Regains Financial Strength, Restores Dividend --------------------------------------------------------------- British Telecom reported last week pre-tax profits of GBP1.273 billion in the year to end-March, allowing it to restore dividend payments, which have been suspended since November 2000, says Reuters. The profit is 28% down from the year-ago figure, though it beat forecasts by analysts who had earlier pegged the full-year figure between GBP900 billion and GBP1.25 billion. Reuters says the lower profit reflects the new, slimmed down group. The company also beat its own target of a GBP15 billion to GBP20 billion debt-burden by end of March, as it managed to halve debt to just GBP13.7 billion. This was made possible by the demerger of its mobile arm mmO2, the sale of foreign interests and a GBP5.9 billion rights issue. As a result of this good performance, the company said it will pay a final dividend of two pence per share. The move cheered the market, which responded with an 18p nudge on the group's share price that reached 274p late last week. As expected, BT Ignite spoiled the otherwise sterling overall results, with an operating loss of EUR353 million, a huge jump from last fiscal year's GBP309 million. The group was forced to write down the value of the unit's European business by GBP2.2 billion in the fourth quarter to reflect the falling value of telecom assets. British Telecom, however, maintains its goal for the unit to breakeven by March 2003, despite forecasts that it will not turn cash flow positive until financial year 2005. The company trimmed down the division's workforce by 2,400, ending the year with only 16,400 staff. "We are confident we are going to make significant inroads into these [operating losses] in the coming year," Finance Director Ian Livingston told reporters during a conference call. Meanwhile, CEO Ben Verwaayen ruled out any sale of BT's fixed- line network, saying separation of the business was not on the agenda in "any way, shape or form". Competitors recently called for the separation of the network from the rest of BT's business in order to make the country's broadband market more competitive by bringing prices down. ITV DIGITAL: License Bidding Attracts Little Interest ----------------------------------------------------- Only half a dozen parties reportedly submitted bids for the licenses of now-defunct digital pay-TV operator ITV Digital, reports the Independent. The deadline for the submission of initial bids closed Thursday last week. The bidders, which include among others MGt, BBC, Crown Castle and SDN, will be required to submit detailed financial plans on May 30, before the Independent Television Commission will name the winner on June 13. Providing the biggest surprise was MGt, a Scottish-based call center operator that has been in business for only four years. According to the group, it plans to use license to launch a new digital terrestrial pay-TV operation. BBC, meanwhile, is expected to team-up with a consortium of terrestrial broadcasters. The plan of U.S.-based Crown Castle is not known, but it will certainly border on recouping its investment in ITV Digital. The transmitter operator's GBP225 million contract with ITV Digital was only three years into its 12-year life when the network collapsed early this month. Little is also known of the plans of SDN, a consortium including S4C, the Welsh language broadcaster and United Business Media, the report says. As expected, BSkyB did not submit a bid. It had ruled out participation from the start, maintaining that its interest is into content provision, which does not need a license. Many believe, though, that BSkyB is the only broadcaster capable of running a subscription-based digital terrestrial television. BBC director-general Greg Dyke said early this month that if Sky did not become involved, the only other option was to make the platform a free-to-air service. KINGFISHER PLC: Buyout Offer for Castorama Changes Stable Outlook ----------------------------------------------------------------- Fitch revised last week the stable outlook of Kingfisher Plc as a result of its offer to buy the stakes it does not own in French Do-it-yourself (DIY) store Castorama Dubois Investissements SCA. According to Fitch, the move necessarily increases the debts of Kingfisher, which impacts its "BBB+" senior unsecured and "F2" short-term ratings. The British firm, which operates two businesses (DIY and Electricals retail), is expected to disburse a total of GBP3.2 billion for the offer. It has underwritten a GBP2 billion rights issue to fund a portion of the deal, with the balance taking the form of debt. The present ratings were assigned after the company acquired Woolworths and Superdrug. At the time, Fitch noted the company had "ample financial headroom for largely debt-funded acquisitions." "Although the quantum of increased debt from the Castorama acquisition would appear to exceed such headroom, Fitch understands that the company has financial flexibility to reduce the additional debt in the short-medium term. If [the] announced bid of EUR67 per share increases, or net debt expectations change, Fitch may have to revisit Kingfisher's rating," the ratings agency warned. Fitch acknowledges that gaining closer control of Castorama will afford Kingfisher greater chances of implementing various efficiency-enhancing measures, "particularly on the procurement side where little synergies have been extracted since B&Q was combined with Castorama in 1998." However, it remains to be seen the impact this acquisition will have on Kingfisher's debt structure. Fitch believes much uncertainty hovers over this deal, thus justifying the negative outlook for the next 12 months. Kingfisher currently owns 54.8% of Castorama. For more information, contact: Giulio Lombardi London Telephone: +44 (0)207 417 6314 Jonathan Pitkanen London Telephone: +44 (0)207 417 4201 KINGFISHER PLC: Castorama CEO Raps Hostile Bid, to Go to Court -------------------------------------------------------------- Castorama CEO Jean-Hugues Loyez says he will fight the takeover bid of Kingfisher Plc for the 45% stake in the French DIY business and will even go to court if necessary. Speaking before the group's annual meeting late last week, Mr. Loyez said he would have accepted the takeover offer had it conformed to a 1998 agreement. "If the deal were being done in a normal way, if it were friendly, I would have no hesitation in advising shareholders to deliver their shares," Mr. Loyez was quoted as saying by the Independent. Under the agreement inked when Kingfisher took 55% control of Castorama four years ago, the British firm agreed to appoint an independent investment bank to assess any bid for the rest. If the price is deemed fair, Kingfisher can go ahead despite objections from Castorama minorities, says the paper. But Mr. Loyez believes the EUR67 per share offer is way too low. He believes Castorama is worth more than EUR70 or even EUR75. In addition, he also does not believe that there is a need for Kingfisher to take full control of the company. "I agree as far as the business split is concerned but I don't understand why they would want to invest EUR5.1 billion (GBP3.2 billion) when there are simpler and more creative ways of creating value," he said. But Kingfisher insists that it holds the prerogative to decide when to exercise its option to take control of the stakes it does not own. "The agreement states that if the independent bank comes back with a satisfactory fairness opinion, then it doesn't matter whether minority shareholders accept or reject our offer. We would still be able to take management control," Kingfisher said in a statement. The investment bank in Lille was expected to rule on the fairness of the bid last Friday. The details of the ruling had yet to emerge at the time of this writing. MARCONI PLC: Italian Subsidiary to Be Floated to Help Pay Debts --------------------------------------------------------------- Beleaguered Marconi Plc will float its Italian-based Strategic Communications business on the Milan Stock Exchange in a move to further whittle down its GBP2.9 billion debt, says the Financial Times. The plan was revealed along with the release of the group's full- year results that showed core sales dropping to GBP3.1 billion and order backlog falling from GBP2 billion to GBP1.7 billion. Total sales slipped from GBP7 billion to GBP4.6 billion. In the 12 months to March 31, the group absorbed pre-tax losses of GBP5.6 billion, partly due to goodwill amortization and exceptional items totaling GBP5 billion. The group, though, had positive operating cash flow of GBP365 million, some of which is likely to be returned to creditors, says the paper. The Italian unit was originally put for up for sale in February at an estimated price tag of GBP400 million. It is considered one of the few remaining non-core assets of any value. Employing 4,000 people in Italy, the U.K., Germany and Turkey, the unit manufactures communications systems for the defense sector. It had sales of GBP300 million in the year to March 31, 2002, says the paper. The Financial Times says it is difficult to assess how much the group will get from this flotation considering the recent difficulties encountered by technology companies attempting to float on European exchanges. Meanwhile, CEO Mike Parton also admitted last week that a debt- for-equity swap is being cooked up by management and creditors. This is the first public acknowledgement of the plan, which has been rumored for a while now. The confirmation shattered its share price, which lost 18% late last week. On Thursday, the day of the report, shares hovered at 7.5p. "We're saying that [a debt -for-equity swap] is clearly one of the options," Mr. Parton told the Independent. Marconi owes GBP2.2 billion in syndicated loans with banks and GBP1.8 billion in bonds. PREMIER INTERNATIONAL: Latest Buy Strains Finances, Says Moody's --------------------------------------------------------------- Moody's assigned last week a negative outlook on several ratings of Premier International Foods Plc in anticipation of a strain in the company's finances as it seals acquisitions this year. The U.K.-based manufacturer and marketer of grocery products recently announced a debt-financed acquisition of some U.K. grocery businesses from Nestle, which is estimated to cost GBP135 million. The negative outlook affects approximately GBP500 million of debts and specifically the company's B1 senior implied rating, the B3 issuer rating and B3 senior unsecured rating. The B1 senior secured bank credit facility rating of Premier Financing Limited was not spared by the move. "The outlook revision to negative reflects that Premier debt credit measurements will be temporarily somewhat strained by the increased bank debt although the acquired businesses are expected to generate significant cash-flows and also synergies amounting to at least GBP5 million on an annual basis," Moody's said. "The negative outlook also reflects that the exposure of Premier to the very competitive private label market will remain significant despite this acquisition. Premier has not been able to date to fully benefit from the cost cuttings it has been able to achieve since price erosions have affected its business lines in the past years. While price pressures from the large U.K. retailers are still to be expected going forward, the scope for further costs cuttings may be now more limited for Premier," Moody's noted. Moody's cautioned the company against maintaining its aggressive financial policy, saying that it should continue its strategy of selective acquisitions in the U.K. grocery market. "While Moody's recognizes that this should strengthen its market position over time and create additional synergies, Premier is also likely to maintain a strained financial profile going forward," the ratings agency said. "A future deterioration of the debt protection measurements following new acquisitions or poor performance could lead to a downgrade," Moody's warned. Premier makes and markets beverages, canned food, preserves, sauces and pickles. For more information, contact: New York Eric de Bodard Managing Director European Corporate Finance Moody's Investors Service Paris Jean-Michel Carayon Vice President - Senior Analyst European Corporate Finance Moody's Investors Service ************ 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. 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