/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/020614.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Friday, June 14, 2002, Vol. 3, No. 117 Headlines * F I N L A N D * SONERA CORPORATION: Introduces Multimedia Messaging to Network SONERA CORPORATION: Launch Commercial Inter-Operator MMS * I T A L Y * FIAT SPA: Undecided About Selling Loss-making Unit to GM * G E R M A N Y * CEYONIQ AG: To Assume Its Former Name of TREEV, Inc. DEUTSCHE TELEKOM: Ordered to Give Rivals Access to Main Links ELSA AG: Inquiry Behind Insolvency Filing Likely, Says Paper IN-MOTION AG: Media Group Remains Listed at Neuer Markt KIRCHMEDIA: French Broadcaster TF1 Also in the Hunt for Assets MOBILCOM AG: Insolvency Will Make Costly 3G License Worthless PHENOMEDIA AG: Continued Operations Will Be Decided August 1 TAURUS HOLDING: Insolvency Caps KirchGruppe's Fall From Grace TELESENSKSCL AG: Telekom Will Disclose Key Figures on Telesens * I R E L A N D * ELAN CORPORATION: Veep Behind Controversial Books Reassigned * P O L A N D * ELEKTRIM SA: Board Chairman's Message Regarding 2001 Results ELEKTRIM SA: Auditor's Report Following Shareholder's Meeting * S W E D E N * FRAMFAB: Internet Consultancy Group Launches New Portal for 3M LM ERICSSON: Sends Microelectronics to German Chip-maker Infineon * U N I T E D K I N G D O M * BEDE PLC: Ships FAB300(TM) X-ray Tool BOOKHAM TECHNOLOGY: Notice of Change in Interests of Directors BRITISH AIRWAYS: To Unveil Own Low-cost Offer to Challenge Rivals CONSIGNIA: Announces GBP 1.1BB Loss, 17,000 Job Cuts DOLPHIN TELECOM: Inquam Acquires Dolphin Telecom UK for GBP 25MM GENERAL INSURANCE: Notice of Creditors' Meeting KINGFISHER PLC: Castorama Lawsuit Before Lille Court Dropped MARCONI PLC: Ex-high-flying Blue Chip to Trade in Small-cap Index RAILTRACK PLC: Results of Initial Contractor Investigation Completed RBG RESOURCES: London High Court Makes Windup Order Final UNIQ PLC: CEO Puts up "For Sale" Sign on Yogurt, Spreads Units ============= F I N L A N D ============= SONERA CORPORATION: Introduces Multimedia Messaging to Network -------------------------------------------------------------- Customers can send multimedia messages on Sonera's mobile network starting June 11, 2002. Sonera's mobile customers can send and receive messages containing text, images, graphics, drawings and voice. To be able to send and receive multimedia messages, the user needs a phone supporting multimedia messaging. In addition, a subscription must be provided with GPRS facility or a GPRS package. The customer can get the multimedia settings required for the use of the service by sending the text message MMS to the number 15400. The multimedia messaging service is activated automatically when the user sends the first message. The service can also be activated through the WAP menu. Initially, the price of a multimedia message is EUR 0.59, which includes the GPRS data transmission. The price is valid until further notice. The connection of the service is free of charge. Multimedia messages can also be sent and received abroad in the networks of operators with which Sonera has a GPRS roaming agreement (10 countries at present). The multimedia messaging service allows a Sonera mobile customer with a multimedia-enabled phone to receive messages containing images and voice or send them to one or more Sonera's mobile customers. It is also possible to send messages to an e-mail address. If the customer has a mobile phone provided with a camera, he or she can take a picture and send it immediately. The customer can attach a verbal message to the photograph in order to convey the atmosphere to all recipients at the same time. If one of the recipients does not have a multimedia phone, the message sent to him or her is saved at the address www.sonera.net/multimediaviestit, where it can be viewed. The message can also be sent directly to the recipient's e-mail address. "We believe that multimedia messaging will be the next marked trend in the sector. Combining voice, text and image brings new dimensions to interpersonal communications. Multimedia messaging may experience a similar boom as text messaging during the last decade: when customers notice its advantages, the number of users grows and thereby also the number of content services," says Vice President Janne Vainio of Sonera. Sonera's multimedia messaging service also allows the customer to utilize mobile services in a more diversified manner. Images bring a new dimension to the present content services and make them more visual and informative than before. The service makes it possible, for example, to show financial news on the mobile phone screen with related diagrams and figures, and to illustrate weather forecasts with weather maps. As from June 11, MMS content services are offered on Sonera's network by six companies. External service providers are connected to Sonera's network by means of the Content Gateway solution, provided to Sonera by the CCC Group (www.cgwbusiness.com). At present, there are only a few multimedia phone models available on the domestic market, but their number is expected to grow rapidly within the next few months. MMS (Multimedia Messaging Service) is an international standard, and so it will be possible to send multimedia messages with most of the mobile phones complying with this standard. MMS operates currently on Sonera's GPRS network, and in the future it will also operate on the UMTS network. UMTS technology will enable, for example, video and real-time services. Sonera Corporation is a leading provider of mobile and advanced telecommunications services. Sonera is growing as an operator, as well as a provider of transaction and content services in Finland and in selected international markets. The company also offers advanced data solutions to businesses, and fixed network voice services in Finland and neighbouring markets. In 2001, Sonera's revenues totaled EUR 2.2 billion, and profit before extraordinary items and taxes was EUR 0.45 billion. Sonera employs about 9 000 people. www.sonera.com Contact Information: Janne Vainio, Vice President Sonera Corporation Telephone: +358 400 400171 Email: janne.m.vainio@sonera.com Timo Ahomaki Director of Product Development Sonera Corporation Email: timo.ahomaki@sonera.com SONERA CORPORATION: Launch Commercial Inter-Operator MMS --------------------------------------------------------- Sonera Corp., Hong Kong CSL Ltd., and Aicent, Inc. Wednesday jointly announced the launch of the world's first commercial inter-operator Multimedia Messaging Service (MMS) over Sonera's and Aicent's GPRS Roaming Exchange (GRX) networks. The service opens a new era in mobile messaging: Now mobile users in Finland and Hong Kong can send MMS messages, including voice, text and images, to each other; and they can access their home MMS services while visiting each other's network. Regarded as a key driver of the 2.5G and 3G mobile data market, MMS is the latest focus of many GPRS operators around the world, and is strongly supported by the GSM Association. Last February, Sonera became the first operator to show that inter-operator MMS works in practice. Since then both CSL and Sonera have launched MMS in their respective markets, with CSL in March as the first in Asia. Sonera launched its MMS service yesterday, with a wide range of MMS services from numerous content providers. Roaming and interconnection are key issues for MMS, as a significant portion of the messages will be exchanged by mobile users served by different operators. For MMS, these inter- operator exchanges are enabled by GRX, the only managed mobile IP data network connecting multiple GPRS operators. In the case of Sonera and CSL, the MMS messages are transited via two GRXs - Sonera's and Aicent's - through a mutual peering arrangement. "We have previously teamed up with Hong Kong CSL to provide the world's first GPRS roaming demonstration and, long before that, the first GSM roaming between Europe and Asia," said Timo Levoranta, Senior Vice President, Sonera Services. "Today, we are proud once again to be the first in the commercial implementation of MMS roaming - across two continents. Furthermore, this event validates the role of GRX as a centralized, flexible, end-to-end managed IP network that benefits all GPRS/UMTS operators." "We are pleased to launch intercontinental MMS with Sonera. This commercial launch is the result of our continuous collaboration, and marks yet another significant milestone in our effort to provide world-class mobile data services to our mobile customers," said Hubert Ng, Chief Executive Officer of CSL. "We held our first MMS Conference in Hong Kong this May and received encouraging response from developers as well as customers. We are confident that MMS will continue to boost data usage in both personal and corporate markets, and is a natural progression to the next generation of mobile communications." "GRX is already an integral part of the global GPRS mobile data network," concurred David Zhang, CTO and VP of Engineering of Aicent, "and it's destined to play an ever-increasing role beyond simple data roaming because of its manageability, security, and QoS, which are all key requirements for tomorrow's mobile data services. The successful MMS inter-connectivity over GRX between CSL and Sonera is an important step in migrating towards next-generation GRX services that promise to deliver even more value to mobile operators." ========= I T A L Y ========= FIAT SPA: Undecided About Selling Loss-making Unit to GM -------------------------------------------------------- Fiat SpA chairman Paolo Fresco bared Wednesday that the company is still undecided on whether to sell its loss-making unit, Fiat Auto, to General Motors, the Financial Times said. For the past weeks, there have been reports that the troubled company could force General Motors, which owns 20 % of Fiat Auto, into buying the remaining 80 % shares at the start of 2004, the paper said. Chairman Paolo Fresco emphasized that there is no hurry for the company to reach a decision on whether to exercise the put option in 2004. "There's nothing ... that pushes us toward a different strategy," he said. Fresco also dismissed speculations that the company's recently unveiled restructuring plan sets the groundwork for Fiat's sale. In addition, Chief Executive Corrado Passera of IntesaBCI, one of Fiat's main creditor banks said Wednesday Fiat's exit is out of the question. He further added that no decision would be made before 2004 as he hopes Fiat should recover before its starts negotiations. IntesaBCI is one of the institutions backing the recently unveiled restructuring plan for Fiat. Other institutions include Banca di Roma and Sanpaolo IMI SpA. ============= G E R M A N Y ============= CEYONIQ AG: To Assume Its Former Name of TREEV, Inc. ---------------------------------------------------- CEYONIQ, Inc. -- www.us.ceyoniq.com --, formerly known as TREEV, Inc., a leading provider of Content and Document Management solutions, confirmed on June 12 that an agreement has been reached with parent company CEYONIQ AG for the sale of the company's U.S. operation, based in Herndon, Virginia. Under the terms of the agreement, the U.S. operation will be sold to a private investor and will be legally independent in its entirety from the former parent company CEYONIQ AG. The court- appointed receiver for the parent company, which filed for insolvency in Germany on April 12, 2002, approved the sale of the U.S. operation. "I am happy to report that this short-term distraction is now behind us," said David E. MacWhorter, president and chief executive officer of CEYONIQ, Inc. "We will progress forward with our business here in North America with continued and absolute focus on our customers." In July 2002, the U.S. operation will assume the well-known previous name of TREEV. MacWhorter confirmed, "Our customers, partners and our market are very familiar with TREEV and continue to recognize us by that name. Many of them were sad to see the familiar TREEV name changed last year after the acquisition." As previously noted by MacWhorter, the twelve-year-old U.S. business operation has always been operationally independent from the parent company. MacWhorter stated, "We are an entirely independent entity, with fully functioning and completely staffed customer support, professional services, and product development departments, complemented by a strong sales, strategic marketing and executive leadership team." MacWhorter summarized, "The TREEV name is back and our company and its business solutions and services are here to stay -- along with a renewed focus on our customers right here in North America." A long-time investor in the predecessor company TREEV provided financing for the purchase. Detailed terms of the transaction were not available. The final purchase transaction with the parent company CEYONIQ AG is expected to close soon. Contact Information: Dotty Andrews Director Marketing Communications, CEYONIQ,Inc. Telephone: +1-703-904-3168 Email: d.andrews@ceyoniq.comor DEUTSCHE TELEKOM: Ordered to Give Rivals Access to Main Links ------------------------------------------------------------- German telecom regulator RegTP has ordered Deutsche Telekom to revise the technical condition under which competitors are allowed access its network paying flat rates, says Total Telecom. At present, rival telecom carriers can only access the network of the former monopoly via 1,600 points across Germany. This is deemed restrictive by competitors who complain that they cannot meet the technical requirements to access these points and therefore need to invest heavily on network upgrades. They further complain that only Deutsche Telekom's Internet services provider, T-Online International, has the technical ability to satisfy said requirements. As a result, to stay in business, competitors are forced to access the incumbent's network by paying minute-by-minute rates. The regulator ruled that Deutsche Telekom, from now on, must open its 475 main connection points to rivals so that they can offer customers competitive monthly flat rates. Still, rivals are crossing their fingers. A spokesman for Arcor, an Internet services provider, pointed out in an interview with Total Telecom that the ruling did not set an access fee, thus giving Deutsche Telekom enough control over who should be allowed into its network. "The question of fees is still open, so we'll have to wait to see if an interesting business model can come out of this," the unnamed spokesman told the industry paper. RegTP, however, expects Deutsche Telekom to propose a flat wholesale rate within six weeks. For its part, the company criticized the ruling, saying it discourages investments in faster broadband lines. The telecom giant says investments will now be reverted back to lower capacity narrowband networks as a result of the ruling. ELSA AG: Inquiry Behind Insolvency Filing Likely, Says Paper ------------------------------------------------------------ An investigation might be launched over the circumstances behind the insolvency of Elsa AG, the German technologies group that sought protection in February, says Financial Times Deutschland. The report did not state what triggered the possible probe, but it noted that insolvency administrator Thomas Georg had indicated recently that the firm may have been insolvent in 1999 yet. The company filed for insolvency on February 25 before the district court in Aachen. It is a leading developer and manufacturer of multimedia and communications hardware and video cards. Difficult market conditions and the consequences of terrorist attacks in the U.S. massively burdened the business towards the end of the quarter last year. The company reported revenues of EUR57.1 million at October 2001 and total assets of EUR155.2 million against total liabilities of EUR121.35 million. As previously reported in the Troubled Company Reporter-Europe, a banking pool decided on February 7 to cancel a EUR28 million credit to Elsa effective February 15. Sweden's SEB and the Netherlands' ABN Amro are believed to have been the driving force behind the creditors' action. One of the creditors, rumored to be Dresdner Bank, notified Elsa that the credit facility of EUR10 million, provided until March 30, 2002, will not be extended. Elsa has a current market valuation of less than EUR20 million (US$17.39 million). For more information, contact Sven Heyden, Investor Relations Manager, through mail at Sonnenweg 11, D-52070 Aachen, Germany; or through telephone +49 (0)241 606-1188, fax +49 (0)241 606-1149 or via e-mail at investor@elsa.de; Web http://investor.elsa.com IN-MOTION AG: Media Group Remains Listed at Neuer Markt ------------------------------------------------------- The international media company IN-motion AG movie, TV & music productions, Frankfurt, has brought an arbitration against the decision of the Deutsche Borse AG, to terminate the listing of IN-motion's shares at the Neuer Markt. According to a statement released last week, the arbitration panel decided after a hearing that the international media group will remain listed at the Neuer Markt. The arbitration panel has adopted to a great extent the argument of IN-motion's counsel, Knoll, Rohrborn & Partner, Munich, that the delisting is not an appropriate sanction. However, IN-motion AG must pay a penalty of EUR 100,000. KIRCHMEDIA: French Broadcaster TF1 Also in the Hunt for Assets -------------------------------------------------------------- Aside from a consortium made up of Commerzbank, WAZ Gruppe and Columbia TriStar, a French television broadcaster has approached a minority shareholder in KirchMedia about bidding for the company's assets. TF1 CEO Patrick Le Lay admitted to the Financial Times recently that he is personally seeking for partners to assemble a viable offer. The paper did not identify the KirchMedia minority shareholder approached by the broadcaster. TF1 is controlled by French construction group Bouygues, says the paper. MOBILCOM AG: Insolvency Will Make Costly 3G License Worthless ------------------------------------------------------------- France Telecom could end up getting nothing out of its EUR2 billion loan to MobilCom, which allowed MobilCom to get a 3G UMTS license should it file for insolvency, says Frankfurter Allgemeine Zeitung. The paper says under German law the license cannot be re-traded and will revert back to the government in case the licensee becomes insolvent. The licensee does not get remuneration. MobilCom paid EUR8.6 billion for the license. Early this week, France Telecom severed its ties with MobilCom after twice failing to convince the board to oust CEO Gerhard Schmid. The French minority shareholder, however, decided not to completely cut financial aid, but warned that it will turn its back for good next month. This will likely lead to insolvency, the paper says. Mobile telephony suppliers Nokia and Ericsson have not yet frozen their credit lines to MobilCom, although it also owes them money. The companies are awaiting the outcome of further developments, sources told the paper. Many, however, believe the French incumbent will not allow MobilCom to slide further into insolvency. The report says the investment poured into getting the license is just too high to be returned to the government for nothing. This brings to the fore the possibility that France Telecom will eventually takeover the stake of Mr. Schmid, who has indicated that he will step down for the right price. Rumors have it that banks currently in talks with France Telecom will buy the stakes at EUR22 per share and hold it temporarily for the French group. This arrangement will allow France Telecom to take control of the German mobile phone affiliate without adding the latter's EUR6-7 billion debt into its EUR60 billion plus debt-pile. Rumors are rife that a deal is near. The row between Mr. Schmid and France Telecom began in March when MobilCom posted a EUR209 million loss for fiscal 2001. Since then, the French phone giant has sought the dismissal of the chief. Mr. Schmid founded MobilCom in 1991, floating it on the Neuer Markt venture segment in 1997. When the stock reached its peak of EUR199 in March 2000, France Telecom acquired a 28.5% stake and pledged financial support to enable MobilCom to bid for a UMTS license, the paper says. PHENOMEDIA AG: Continued Operations Will Be Decided August 1 ------------------------------------------------------------ Creditors of Phenomedia AG, the computer games manufacturer, will determine whether to restructure or liquidate the operations of the group upon opening its insolvency proceedings on August 1, a report obtained from the Financial Times Deutschland says. The managing board of Phenomedia on May 14, 2002 applied for the opening of insolvency proceedings at the court of Bochum where Dr. Jur. Wulf-Gerd Joneleit was appointed temporary insolvency administrator, the German group announced in a statement. The managing board is continuing to negotiate with a number of potential investors to quicken the progress of the company's recapitalization. BHF-Bank and the leasing company Deutsche Leasing, according to the to Financial Times Deutschland, stand among Phenomedia's creditors. In the course of the restructuring, in order to concentrate on core competences, a number of Phenomedia AG's staff was cut within the legal periods of notice. About 90 employees to about 40 will be affected. Meanwhile, the company said that a special audit started on April 22 remains ongoing. The audit is conducted by the supervisory board and the auditory company Warth & Klein, appointed by the managing board, the statement said. The supervisory board of Phenomedia AG after revoking the appointment of Markus Scheer and Bjorn Denhard to the managing board on 15/04/2002. The remaining board members Jurgen Goeldner and Holger Muller immediately took over. TAURUS HOLDING: Insolvency Caps KirchGruppe's Fall From Grace ------------------------------------------------------------- The last cornerstones of the KirchGruppe media empire have fallen, capping its complete collapse into insolvency. German daily Handelsblatt says the umbrella holding company Taurus Holding GmbH & Co. KG, along with Kirch Beteiligungs GmbH & Co. KG and Formel Eins Beteiligung GmbH, applied for protection Wednesday in Munich. Kurt Bruder was appointed insolvency administrator of Taurus, while Michael Jaffe, who is also the administrator of KirchMedia, will be momentarily responsible for Kirch Beteiligung and Formel Eins Beteiligung. The paper says the fall of Taurus means that the EUR1.7 billion put option Rupert Murdoch holds for his 22% stake in loss-making Premiere is now worthless. He would have been eligible to exercise said option this October. Separately, the fate of Kirch's Formula One stakes and 40% interest in Axel Springer Verlag are now surrounded by uncertainties due to the collapse of Kirch Beteiligung. The group maintains a complex structure of interrelationship among its ventures and apparently this is one of them. The paper says the fate of both the Formula One and Axel stakes are bound to the fate of Kirch Beteiligung. Meanwhile, Japan-based Sony, parent of Columbia TriStar, which is part of a consortium that offered a bid for KirchMedia early this week, confirmed that it is indeed eyeing the German media rights trading company. "That's an interesting matter. It is a splendid firm," Sony CEO Nobuyuki Idei told Handelsblatt. Commerzbank and WAZ Gruppe are the other members of the consortium and will each take 40% in KirchMedia, if successful. Columbia will hold the 20%. But Chief Risk Officer Wolfgang Hartmann disclosed this week that Commerzbank will eventually reduce its stake and might sell some of it to WAZ Gruppe, which is keen on taking majority control. The consortium wants the new company to be set up as a joint- stock firm, a status that would ease the way for a later stock market flotation. Mr. Hartmann estimates KirchMedia's current worth at EUR1.8-2.5 billion. He puts the debt mountain at "over three billion euros," says Handelsblatt. TELESENSKSCL AG: Telekom Will Disclose Key Figures on Telesens -------------------------------------------------------------- Deutsche Telekom AG, who indirectly holds 25.9% in TelesensKSCL AG -- http://www.TelesensKSCL.com-- has notified the company, that in its U.S. Annual Report financial information has to be disclosed in relation to TelesensKSCL AG for the business year 2001 in accordance with U.S. GAAP. Their statement will include the following key figures: revenues of EUR 82 million, a net loss of EUR 245 million, and, as per December 31, 2001, a balance sheet total in the amount of EUR 135 million, liabilities of EUR 69 million and an equity in the amount of EUR 66 million. The Management Board of TelesensKSCL AG points out that the information given is based on values calculated for TelesensKSCL group which are preliminary and not finally audited. TelesensKSCL AG's consolidated accounts in accordance with IAS and its individual accounts in accordance with the German Commercial Code (HGB) may diverge substantially. This applies in particular in case of the opening of insolvency proceedings. The Management Board in this regard refers to its announcement dated June 3, 2002. At the same time, the Management Board informs that Thomas Grothe, Managing Director of T-Telematik Venture Holding GmbH, Bonn, today was appointed new member of the Supervisory Board of TelesensKSCL AG. Christian Stolorz leaves the Board for health reasons. Contact Information: Investor Relations Nina von Moltke EMail: investor@telesenskscl.com TelesensKSCL AG Global Solutions Ferdinand-Porsche-Strasse 1 51149 Koln Telephone: +49 2203 91 28 888 Fax: +49 2203 91 28 150 ============= I R E L A N D ============= ELAN CORPORATION: Veep Behind Controversial Books Reassigned ------------------------------------------------------------ Tom Lynch, who helped create the complex accounting structures now being probed by the U.S. Securities and Exchange Commission, has been stripped of his other duties so that he can focus on his new task: dealing with lawsuits and investigators. Currently the company's vice president, Mr. Lynch is considered one of the architects of the financial labyrinth that is now Elan's books. British daily, the Independent, believes the reassignment of Mr. Lynch is a sign that the company has acknowledged that the controversy has become serious. "The SEC investigation is the monkey on their back at the moment. Mr. Lynch was intimately involved in its cause, so he is being put in charge of its effect," an analyst told the Independent in an interview. Mr. Lynch, along with Chairman and CEO Donal Geaney, came to Elan from KPMG, its accountants. Together they have turned the drug delivery technology group into a full-service pharmaceuticals group. The company, however, is now facing 30 class action lawsuits in the U.S. on top of the SEC inquiry, which started in February. The lawsuits claim that Elan misled its investors about its real financial footing. Doubts regarding the veracity of its books surfaced when the company issued a profit warning a few months back and admitted that the previous year's earnings would have been substantially lower had it included several research funding vehicles on its balance sheet. Analysts expect the SEC investigation to last until next year and Mr. Lynch is to liaise with investigators, the Independent says. Elan's shares, already just a fifth of their value at the start of the year, fell 9% to a new low of 462.5p Wednesday. In a separate report, Reuters said the company has also re- assigned Timothy Wright, head of international sales and marketing. He will now take responsibility for sales and marketing in the United States, the company's most important market. Lars Ekman, president for research and development, biopharmaceuticals, will be in charge of all research and development other than at the King of Prussia, Pennsylvania site. Shane Cooke, on the other hand, will remain chief financial officer but will also directly manage all operational finance activities. Seamus Mulligan, named earlier to head Elan Enterprise, will have responsibility for global business development and planning. =========== P O L A N D =========== ELEKTRIM SA: Board Chairman's Message Regarding 2001 Results ------------------------------------------------------------ In a statement Wednesday, Maciej Radziwill, president of the Management Board of telecom and power conglomerate Elektrim SA, announced the following: On behalf of the Management Board of Elektrim S.A., I would like to present the Annual Report of Elektrim S.A. for the year 2001. "The past year was particularly difficult and demanding not only for Elektrim S.A. but also for the whole economy. The changes and the turbulence across much of the world economy, which affected a great number of major and powerful companies did not spare the firms operating on the Polish market. For our company it was a particularly difficult time of further challenges and modifications in the Elektrim Group's structure and management approach. "When I was assuming the post of the Management Board's President in April this year, Elektrim was seriously indebted, the composition proceeding with creditors was being finalized and the company was facing bankruptcy. The major reason for this situation was the Company's disorderly expansion in the telecommunications and Internet sectors in previous years. The Company yielded to the euphoria of investing in those sectors, and, in addition, a number of serious errors were made. I realise that making up for the loss will be hard, but I also believe in building the recovery of the Company's value for its Shareholders, partners and employees. "The most important goal for the present Management Board is to stabilize the Company's situation, reach an agreement with the major creditor, i.e. the group of bondholders representing a total of claims of approximately EUR 480 million, avoid bankruptcy, restore confidence in the Company and calmly repay the liabilities from telecom asset disposal proceeds. The market for these assets is very difficult. Major world telecoms companies are seriously indebted and Elektrim's partners, Vivendi Universal and Deutsche Telekom have not managed to avoid financial difficulties, either. The path to reviving the Company is open as a result of signing an initial agreement with bondholders, which I hope will be finalized in the coming weeks. "Elektrim will base its development on the power sector. As soon as we overcome the indebtedness and restore confidence, we will be able to focus on the development of a competitive power company that can play a key role in power generation and distribution on the Polish market. For the first time in many years has Elektrim a focused ownership structure of individual people and institutions who see Elektrim's future in the power sector. On the capital market, on the other hand, Elektrim has an opportunity to provide / open unique access to investment projects in this sector. "The year 2001 has already proved how exceptionally important the measures undertaken in the power sector were for the development of the whole Elektrim Group. The execution of contracts with international and Polish customers opened new growth opportunities for companies in the sector. The contracts allowed subsidiary companies to returnt to such markets as, among others, Germany, Russia, Kazakhstan, Bosnia and Herzegovina and Finland. Profitable contracts have been signed on the Polish market. Rafako signed, among others, a contract with Energomontaz Polnoc - Belchatow Sp. z o.o. Dynamic growth was recorded by the power plants of Patnow-Adamow-Konin, which in 2001 generated sales that were 15.8% higher than in 2000. Another major success of PAK was obtaining Quality System Certification in accordance with the requirements of the ISO 9001:2000 norm. The activity of Elektrim Volt S.A. was observed, too. In 2001, Elektrim Volt was granted two awards: "Company of 2001", a prestigious award granted by the Polish Business Club for active participation in establishing a competitive market for electrical energy, and an award in the ranking of "2001 Business Gazelles" organized by the paper "Puls Biznesu" for the most dynamically developing Polish firm. "A major opportunity for the development of power companies of the Elektrim Group has been created by the commitment in environment protection related investment projects and co- operation with telecommunications companies in the roll-out of fibre optic lines. "Focus on the power sector signifies a comeback to Elektrim's original business, for which the Company was always famous. I hope that this will also help return the Company to its previous splendour. "Another of our objectives is the reduction of the Company's total debt. This will be connected with further disposals of assets that are non-core for the power business. In 2001, proceeds from the sale of part of the telecoms assets amounted to Euro 590 million, while the sale of cable manufacturing assets represented proceeds amounting to approximately Euro 120 million "The reduction in management and employment costs is also of major significance for the Elektrim Group. In this regard it will be necessary to renegotiate previously signed agreements and reduce the level of our customers' claims, as well as reduce the cost of external advisory services. "I wish to thank all Employees and Partners of the Elektrim Group on all tiers in all subsidiary companies and the members of the Supervisory Board for their hard work, creativity and enterprising activities and for their participation and contribution to the transformation and reorganization process of our company. "Despite the complicated financial situation, Elektrim S.A. continues to be a company seeking new growth opportunities. I hope we will jointly overcome the present difficulties and regain financial liquidity. The aim of all actions undertaken by the Management Board is growth in Shareholder Value, restoration of confidence and strengthening the Company's position on the market. We also want the steps we take to provide our Employees and partners with strength and motivation to further work. " The company's balance sheet and profit and loss statement may be viewed at: http://bankrupt.com/misc/12elektrim_bs_pl.doc ELEKTRIM SA: Auditor's Report Following Shareholder's Meeting ------------------------------------------------------------- Jacek Hryniuk, representing Arthur Andersen reported on June 12, 2002 to the shareholders of Elektrim S.A. as follows: 1. We have audited the annual financial statements of Elektrim S.A. located in Warsaw, ul. Panska 77/79, including: - introductory notes, - the balance sheet as of 31 December 2001 with total assets and - liabilities amounting to 8,471,587,514.03 zloty, - the profit and loss account for the period from 1 January 2001 to 31 December 2001 with a net profit amounting to 59,177,772.71 zloty, - the statement of changes in shareholders' equity for the period from 1 January 2001 to 31 December 2001 with a net increase of shareholders' equity amounting to 59,177,772.71 zloty, - the cash flow statement with a net cash inflow for the period from 1 January 2001 to 31 December 2001 amounting to 608,718,842.88 zloty, - explanatory notes. Form of the financial statements is prescribed by the Decree of the Council of Ministers dated October 16, 2001 on current and periodic information published by issuers of securities (Journal of Law No 139, pos. 1569). 2. The Company's management (the "Management") is responsible for preparation of these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit. 3. We conducted our audit of the financial statements in accordance with regulations being in force in Poland: - chapter 7 of the Accounting Act dated September 29, 1994 - (the "Accounting Act") - auditing standards issued by the National Chamber of - - Auditors, in order to obtain reasonable assurance about whether the financial statements are free of material misstatement. In particular the audit included examining, mainly on a test basis, evidence supporting the amounts and disclosures in the financial statements. The audit also included assessing the accounting principles used and significant estimates made by the Company, as well as evaluating the overall financial statement presentation. 4. We have audited the annual financial statement for the year ending December 31, 2000 and we issued a qualified opinion dated June 8, 2001. The circumstances related to the first qualification have not changed and are described in point 5 below. Second qualification related to the presentation of the part of liability arising from the Restructuring Agreement (described in point 8) as capital. This qualification has been taken into consideration in the process of preparing the financial statements for the period ending December 31, 2001 and the comparable financial data for the period ending December 31, 2000. 5. On December 7, 1999 the Company has increased capital in its subsidiary Elektrim Telekomunikacja Sp. z o.o. contributing in kind shares of the company Polska Telefonia Cyfrowa Sp. z o.o. at a value, which was significantly higher than historic cost initially presented in the Company's books. These shares together with shares in another subsidiary were the base for the price calculation of Vivendi 49% stake acquisition in ET. As at the end of 1999 the difference between the value of contributed shares and their historic cost before the increase of capital has been presented as deferred income. In year 2000, the Company released the deferred income resulting from the higher valuation into financial income in the amount of 4,971.8 million zloty thus recognizing a net result after deferred tax in the amount of 3,451.1 million zloty. This was an effect of Management intention to reflect the appreciation in value of its shares in PTC as part of the equity of the Company as well as to separate the deferred income from total liabilities. Under generally accepted accounting standards the above mentioned financial income and respective tax liability would be recognised at the moment when shares in ET are sold outside of Elektrim Capital Group. In 2001 the Company sold 2% of shares in ET outside of Capital Group. The above sale would have resulted in a recognition of part of the above mentioned financial income amounting to 135.3 mln PLN. Had the Company recognized only the above income proportionally to the sales of shares in ET in its profit and loss account, the net assets for the year ended December 31, 2001 would have been lower by 3,315.8 million zloty. The effect of the above issue relating to the remaining share of the Company in ET is fully eliminated in the consolidated financial statements of the Capital Group. The value of the Company's stake in ET as at December 31, 2001 amounts to 4,906.4 million zloty. The Company has not made an assessment of the impairment of ET's shares and we are not able to assess correctness of the valuation of these shares. 6. In year 2001 the Company sold shares in fixed line telecommunication companies to ET. Profit on these sales amounting to 796.4 mln PLN was recognized fully in profit and loss account in 2001. In our opinion the Company should recognize the profit on these transaction proportionally to its share in ET as at December 31, 2001. Had the Company recognized its profit adequately in the profit and loss account, net result for year ended December 31, 2001 would have been lower by 390.2 mln PLN. 7. Based on the "put" option, described in the Offering Circular dated June 28, 1999, bondholders had right to redeem bonds as at 15 December 2001. On December 17, 2001 bondholders decided to exercise their right to redeem bonds amounting to 479.3 mln EUR. On December 27, 2001, Elektrim S.A. filed a request with the District Court in Warsaw for the settlement with creditors, along with an application for discontinuation of enforcement. The settlement proceedings commenced on January 16, 2002. On April 23, 2002, an arrangement proposal was presented to the creditors of the Company, however, the holders of convertible bonds representing jointly over 80% of the total amount of debts voted against the acceptance of arrangement proposals. Therefore, the Court decided to discontinue settlement proceedings. The Company's Management Board, due to the lack of majority of creditors taking part in voting, filed a complaint against this decision. On May 10, 2002 the Company's Management signed an initial agreement with the major bondholders of bonds issued by Elektrim Finance B.V. The Company's Management believes that negotiations with bondholders will be concluded in a positive way, which would enable the Company to restructure its current liabilities. As the date of auditors' report we are not able to assess the final result of management actions. As at December 31, 2001 the Company's current liabilities exceed its current assets by 909.2 million zloty and, as further mentioned in explanatory note 2d, the Company had significant off-balance sheet and contingent liabilities. Based on the facts described above there is significant doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as going concern will depend on the final conditions of the agreement with bondholders that would allow for repayment of liabilities and on obtaining significant sources of financing for continuing Company's operations. Financial statements of the Company were prepared based on the going concern assumption and do not include any adjustments resulting from different assets and liabilities valuation principles which should have been applied in case the Company was not able to continue as a going concern. 8. In the process of the Initial Public Offering of the Company's shares, the Company signed a restructuring agreement with the State Treasury dated September 26, 1991. As a result of that agreement the Company recognized certain liabilities to the State Treasury resulting from settlements of contracts concluded by the Company in the prior periods and committed to transfer net inflows resulting from the settlements of the contracts described above to the State Treasury. As at December 31, 2001 the Company's assets included 606.3 mln PLN of receivables and loans and 200.6 mln PLN of restricted cash on bank account arising from the Restructuring Agreement. Part of the Company's receivables amounting to 529.0 million zloty as at December 31, 2001, which are earmarked to settle part of the liability to the State Treasury may not be collectible. These receivables relate primarily to contracts in Turkey. According to the Management of the Company all contracts were entered into by the Company on behalf of the State Treasury and with the prior approval of the State Treasury. Therefore, the Management believes that subject to the Management continuing activities to collect those receivables on a best effort basis, the collection risk of these receivables resides with the State Treasury. In Management's opinion the Company continues to make best efforts to ensure the realisability of the assets resulting from the restructuring agreement. As of the date of this auditors' report we are unable to assess the realizability of these receivables and effectiveness of Management's efforts. The financial statements have been prepared on the basis that the Company will not be liable to the State Treasury should the Company fail to realize in part or fully the State Treasury assets resulting from the Restructuring Agreement. 9. As described in additional explanatory note 2a and 2b to the financial statements there is an arbitration initiated by DeTeMobil Deutsche Telekom MobilNet GmbH registered in Bonn ("DT Mobil"). DT Mobil questions the validity of the transfer of shares in PTC to the Company by former shareholders of PTC, claims a right to purchase a portion of such shares and claims that the Company is in material default of the PTC Shareholders' Agreement. The Company has filed a defense wherein the Company argues that the transaction has been executed properly and therefore the claim must be dismissed. In addition the Company has filed a counterclaim wherein the Company contends that DT Mobil is in material default of the Shareholders' Agreement. In addition, in December 2000 DT Mobil has commenced a second arbitration against the Company and ET in which DT Mobil seeks to have the transfer of the Company's PTC shares to ET invalidated or declared ineffective, to have the Company declared to be in material default of the PTC Shareholders Agreement, to permit DT Mobil to exercise call option over the shares in PTC held by the Company and/or ET, and to have damages for DT Mobil alleged losses resulting from the claimed breaches compensated. On February 5, 2002, DT Mobil filed a petition for extending the statement of claim in arbitration proceedings and requested that the Arbitration Tribunal issue a partial award that, in connection with the pending settlement proceedings, the Company's "economic situation has deteriorated", within the meaning of Article 19 of the Shareholders' Agreement of PTC, and thus the Company has breached the PTC Shareholders' Agreement. Management is confident that the result of the arbitration proceedings will be favourable to the Company and is advised by independent legal counsel that support its position. The financial statements as at December 31, 2001 have been prepared on the basis that the DT Mobil claims will be dismissed. 10. Because of the significance of the matters in the preceding paragraphs and their consequences for the financial statements, we are not able to express an opinion on the financial statements for the year ended December 31, 2001. 11. We have read the Report of the Management Board on the Company's activities and rules of preparing annual financial statements and we consider the information presented in the part covering information prescribed by Article 49 Clause 2 of the referred to above Accounting Act consistent with information included in the attached financial statements. The scope of the information presented in the Directors' Report is in line with the scope of information as prescribed by the Decree of the Council of Ministers dated 16 October 2001 on current and periodic information published by issuers of securities. 12. In accordance with the regulations of the Accounting Act, the Company presented in the attached financial statements shares in subsidiaries and associates at purchase price adjusted for any permanent diminution in value of certain shares. In accordance with the Accounting Act the Capital Group of which the Company is a parent company has prepared consolidated financial statements on 27 May 2002. The Capital Group's net assets and financial result significantly differ from the Company's financial results for the year ended 31 December 2001 and its net assets as at that date. =========== S W E D E N =========== FRAMFAB: Internet Consultancy Group Launches New Portal for 3M -------------------------------------------------------------- Framfab in Germany launched a new portal for advertisers in collaboration with 3M Deutschland GmbH and selected partners to 3M, the IT group's said statement in a statement Wednesday. www.scotchprint.de displays for advertisers through image and text the wide potential for effective outdoor advertising, for example on vehicles, flooring and facades. The web site was designed and implemented by Framfab Germany in collaboration with the other partners of the project. The launch of the new portal offers advertisers a new platform with practical ideas for outdoor advertising. Framfab Germany has the opportunity for additional contracts for the maintenance of the Scotchprint portal and a possible expansion of it. As Dirk Hollstein, Sales Manager for 3M Commercial Graphics, puts it: "At the very beginning of the project we were looking for ideas for joint Internet activities with our channel partners. Framfab Germany has developed this portal concept for Out-of-home advertising, and we believe that it will contribute to making scotchprint.de a widely-known brand." Framfab will also be working with 3M in conjunction with search engine optimization and implementation of a web-controlling tool. According to Marcus Roseler, Project Manager at Framfab Germany: "We are looking forward to the further expansion of the portal. The motivation and participation of 3M in the original design and implementation has been exemplary. The creativity and expertise of both client and service-provider have been combined to produce excellent results." Framfab -- www.framfab.com --, with headquarters in Sweden, is a leading supplier of consulting services and business solutions based on Internet technologies. Framfab operates in Denmark, France, Germany and the Netherlands. The company is listed on the Stockholm Stock Exchange's O-list (ticker FTID). Contact Information: Marcus Roseler Project Manager Framfab Germany Telephone: +49 2234 699 188 Email: marcus.roeseler@framfab.de Joachim Brettschneider CEO, Framfab Germany Telephone: + 49 1782 449 292 Email: joachim.brettschneider@framfab.de Anders Ekman, CEO, Framfab AB Telephone: +46 8 41 00 10 00 Email: anders.ekman@framfab.se LM ERICSSON: Sends Microelectronics to German Chip-maker Infineon ----------------------------------------------------------------- Microelectronics, a chip-making unit of Ericsson, has been sold to German rival Infineon in a EUR400 million deal paid in shares, says Total Telecom. The company would not disclose the size of stake it will take in Infineon as a result of the deal, which will be completed in the summer, pending regulatory approval, the report says. "This strategic partnership will significantly strengthen our communications business. In addition to building on our wireless design expertise, Infineon will team up with Ericsson as a leader in the wireless world and become a strategic partner," Infineon Technologies CEO Ulrich Schumacher said in a statement. The German firm will take over 700 employees, products, research and development, as well as manufacturing and production equipment, the report says. Some 600 people at the two manufacturing plants in Stockholm, however, would remain Ericsson staff. Ericsson is hard-pressed to dispose of non-core assets as it continues to reel from weak demands in the telecom sector. It had earlier announced that its cable division was also for sale. "We view this as a significant step in further focusing on our core business," a statement by Ericsson CEO Kurt Hellstrom said. Mr. Hellstrom recently discredited projections that the economy will rebound in the second half. He believes that an upturn beginning next year is even doubtful. But he said the company is confident it will be able to return to profit "some time next year." Ericsson is planning a SEK30 billion secondary equity offering that is equivalent to about 18% of its current market value. Mr. Hellstrom said the issue is key to seeing the company through the downturn. He said proceeds of the rights issue will be used to strengthen the company's balance sheet and ensure enough working capital until market conditions improved. =========================== U N I T E D K I N G D O M =========================== BEDE PLC: Ships FAB300(TM) X-ray Tool -------------------------------------- The Directors of Bede plc Wednesday announced that the first FAB300(TM) X-ray tool, shipped under an US$18 million supply agreement, as previously announced on March 22, 2001, has been successfully commissioned and accepted by the customer. This event marks an important step in the company's strategic plan of introducing its advanced X-ray techniques into the high volume silicon microelectronics manufacturing environment. The Bede FAB300(TM) is an automated X-ray front-end metrology tool, used to determine key material parameters of advanced semiconductor materials in the latest generation of 300mm fabrication lines. Commenting on the successful acceptance, Dr Neil Loxley, Chief Executive of Bede plc, said "The commissioning and acceptance of this instrument is an important milestone in Bede's strategic development since listing on the London Stock Exchange in November 2000, demonstrating that the company can successfully commercialise and deliver its leading X-ray technology and expertise into extremely demanding markets." Bede is a global leader in the design and manufacture of innovative metrology tools for the routine materials characterization of advanced semiconductor devices. Contact Information: Neil Loxley, Chief Executive David Hall, Finance Director Bede plc Telephone: +44 (0)191 332 4700 BOOKHAM TECHNOLOGY: Notice of Change in Interests of Directors -------------------------------------------------------------- On June 12, 2002 the following directors of Bookham Technology plc -- www.bookham.com -- were granted options over the Company's ordinary shares of 1/3p each, as follows: David Simpson was granted 12,000 Options exercisable from June 12, 2002 until June 12, 2012 at an exercise price of GBP0.79. No amount was paid for the grant. The total number of Options Dr Simpson holds following this notification is 486,088. Lori Holland was granted 12,000 Options exercisable from June 12, 2002 until June 12, 2012 at an exercise price of US$1.12. No amount was paid for the grant. The total number of Options Ms Holland holds following this notification is 408,826. Robert Rickman was granted 12,000 Options exercisable from June 12, 2002 until June 12, 2012 at an exercise price of GBP0.79. No amount was paid for the grant. The total number of Options Mr Rickman holds following this notification is 152,488. Arthur Porter was granted 12,000 Options exercisable from June 12, 2002 until June 12, 2012 at an exercise price of US$1.12. No amount was paid for the grant. The total number of Options Dr Porter holds following this notification is 319,613. Jack Kilby was granted 12,000 Options exercisable from June 12, 2002 until June 12, 2012 at an exercise price of US$1.12. No amount was paid for the grant. The total number of Options Mr Kilby holds following this notification is 128,346. 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 UK, with offices and manufacturing facilities in the US and UK, and has additional offices in France, Italy, Japan and China. The company employs approximately 850 people worldwide. BRITISH AIRWAYS: To Unveil Own Low-cost Offer to Challenge Rivals ----------------------------------------------------------------- Faced with intensified competition from low-cost carriers, British Airways announced this week that it would launch its own no-frills offer, in a 3-stage strategy that will kick-off later this month. According to the Independent, CEO Rod Eddington aims to have low fares in place across most of the carrier's European network, which services 60 destinations and more than 150 routes. Mr. Eddington says the move is part of the carrier's strategy to make the European operations profitable again. Accordingly, the group lost some GBP726 million from this segment in the last three years. At the moment, only 18 domestic and six European routes to the Netherlands and Scandinavia are offered low-priced fares. Mr. Eddington says his airline will have to role out its new low-cost strategy on a much wider basis if it is to have a real impact on no-frills rivals. The chief says the success of the strategy will not be measured in terms of passengers but in profits. This he said in response to the claim of Ryanair CEO Michael O'Leary, who said that the Irish low-cost carrier would overtake British Airways as Europe's largest scheduled airline within five years. Mr. Eddington predicts the low-cost market to be consolidated soon, leaving two airlines to service this segment. EasyJet, which is in the process of acquiring Go, Ryanair, bmibaby, Buzz and Virgin Express are presently crowding this market. CONSIGNIA: Announces GBP 1.1BB Loss, 17,000 Job Cuts --------------------------------------------------- Consignia -- www.consignia.com -- announced Thursday a GBP1.1 billion, pre-tax loss for the year ending March 2002 as the company unveiled more details of its radical restructuring plan. The Chairman, Allan Leighton, said: "The underlying loss from operations of GBP318 million graphically shows why we need to restructure the company and embark on our three-year renewal programme to restore profitability." He also announced that Royal Mail would save GBP350 million a year by moving to a single delivery at a consistent time, six days a week. "This is the most sensible and responsible way to reduce costs with minimum impact on customers," said Mr Leighton. At present, the second delivery, which the majority of addresses are scheduled to receive, accounts for 20% of Royal Mail's total costs and 30% of the time taken to deliver letters, but delivers just 4% of the U.K.'s mail. "We can make large savings by eliminating this inefficiency," said Mr Leighton. These plans, together with other efficiency measures across the Group, will result in a further 17,000 jobs becoming redundant over three years. Consignia expects to offer employees whose jobs are to disappear a choice between redeployment elsewhere in the business or a voluntary redundancy package. Consignia's three- year renewal plan is expected to reduce annual gross costs by GBP1.4 billion by April 2005. Mr Leighton also announced that by the end of 2002, the company's corporate name would become Royal Mail Group plc. "The new name reflects the greater concentration on our core commercial services and is particularly apt in this Golden Jubilee year," he said. John Roberts announced that after seven years as CEO he plans to retire from the company. He intends to step down later this year once his successor has been appointed. Most of the GBP1.1 billion comprises exceptional costs from restructuring. However, the company lost GBP318 million on its day-to-day operations, equivalent to GBP1.2 million every trading day with all core businesses losing money. Overall turnover grew by 3.6% but the growth was outstripped by a 4.8% rise in costs. Loss on ordinary activities before Interest, pension benefit and exceptionals GBP million Royal Mail domestic business 74 loss UK parcels 94 loss International mails and parcels 58 loss Logistics Solutions 15 loss Post Office network 163 loss Group Center and support services 86 profit Total 318 loss Mr Leighton, who became Chairman in March, said: "Unresolved issues and problems stretching back for up to a decade are reflected in these results. A range of factors has come together to produce the GBP1.1 billion loss. "This loss didn't spring up over just one year," said Mr Leighton. "Making Consignia a great place in which to work is a key priority. Instead of a well-paid, highly motivated workforce and an efficient operation, we've got low-paid employees, high operating costs and low morale. Being able to give our people a better reward for the work they do will lift morale and, crucially, this will boost customer service. In addition, management mistakes have been made over a number of years, including a failure to resolve deep-rooted industrial relations problems." "We won't be distracted by internal inquests or political sensitivities. The business needs leadership and a single focus on straightforward, clear priorities. "We've got to restore the morale of our people, improve the service to customers and make the company profitable. "I would not have taken on this job unless I was convinced this company can be turned around. It's going to involve hard graft by everyone who works in Consignia - but we can and will achieve our goal." Mr Leighton added: "Inevitably, restructuring will involve job losses. We will do everything possible to redeploy people whose jobs become redundant, or offer them a voluntary redundancy package. "We announced in March that about 13,000 jobs would become redundant and employees offered redeployment or voluntary redundancy. The further 17,000 announced today is in line with our forecast that up to 30,000 jobs will become redundant over the next three years. "We must stop hemorrhaging cash. We are spending more than we earn. The current position is untenable. The only viable option is to restructure, right across the company." The total gross savings of GBP1.4 billion include the benefits from cutting management costs and other efficiency measures across the company amounting to some GBP100 million. Mr Leighton said the key elements of the three-year renewal plan were: A single mail delivery, six days a week, at a consistent time. Pilot schemes in 14 areas will commence next month with a national roll-out due to start in the autumn following consultation with Postcomm and Postwatch, and be completed by October 2003. One million more First Class letters every week should hit their delivery target. The plan's changes also mean that the U.K.'s delivery postmen and women can work a five-day week, instead of the current six, although deliveries will continue to be made over six days. Annual savings: GBP350 million. Operational improvements in Royal Mail including streamlining operations in London, the introduction of new automated sorting equipment, and building a new international mail centre near Heathrow Airport. Annual savings: GBP330 million. Restructuring the U.K. parcels business. Annual savings: GBP500 million. Streamlining the transport network. Annual savings: GBP100 million. Outsourcing and streamlining non-core activities. Annual savings : GBP70 million. Cutting management costs in the Post Office network. Annual savings: GBP50 million. The postal regulator, Postcomm, recently announced a revised timetable for the introduction of competition into the UK mail market, leading to a full opening of the market by April 1 2007. Consignia estimates that after the full effects of competition have worked through over the next three to five years, it could lose around 30% of its current market share, in terms of both revenue and mail volume. The renewal plan is in place to minimize this impact. Mr Leighton said: "The three-year renewal plan we are putting in place includes exceptionally demanding targets and is underpinned by a positive response by Postcomm to both our price increase application for the Autumn and network access as a new revenue stream." Mr Leighton said approval was still awaited from Brussels on a Government support package of up to GBP210 million for the urban Post Office network. The money is part of an overall sum of GBP270 million pledged by the Government to support both the urban and rural networks. This GBP210 million for the urban network is earmarked for compensation for subpostmasters and for investment in urban offices. "Inevitably, there will be fewer urban Post Offices as there are not enough customers to sustain the current number of offices," said Mr Leighton. "The network is losing over GBP3 million a week and many subpostmasters are already struggling to survive in urban areas, even before the switch to direct credit of benefits into bank accounts next April. Early indications from subpostmaster feedback suggest that around 3,000 may be interested in taking up the offer to close. "The network will need Government support for the foreseeable future, as recommended by the Cabinet Office's PIU report." Overall, we expect trading losses to continue into next year at a similar level with further exceptional costs of around GBP500 million in the first half of the year. This is mainly as a result of the announced changes to the U.K. mails delivery patterns and the 17,000 jobs becoming redundant announced today. Mr Leighton added, "This is about building a solid foundation from which to move forwards. Consignia's renewal plans will see the mail and parcels operations return to profitability within three years. In recent weeks we have secured a more positive regulatory environment and agreement in principle to funding from Government, using our past profits held as market investments on Consignia's balance sheet. Most importantly the recent conclusive 'yes' vote by our people to the Royal Mail pay deal demonstrates that they understand the present business imperatives and the need to make changes to the way we work." DOLPHIN TELECOM: Inquam Acquires Dolphin Telecom UK for GBP 25MM ---------------------------------------------------------------- Inquam, an international company that develops and operates innovative specialized wireless networks, announced Wednesday that it has acquired the business and some of the assets of Dolphin Telecommunications Ltd, the U.K. mobile business telecommunications provider, for a total consideration of GBP25 million. Nick Edward of Deloitte and Touche has acted as Administrator of Dolphin since August 2001. Under the terms of the agreement, Inquam now owns the Dolphin UK TETRA network, which currently provides nation-wide digital coverage and high-quality specialized mobile radio services to 45,000 business subscribers. Inquam will continue to operate the Dolphin service and has a fully funded turnaround plan to position Dolphin UK as the leading provider of professional "push-to-talk" services in its target market. This market includes the utilities, transport, logistics, and construction sectors. Inquam's senior vice-president of operations, Tony Greaves, formerly of O2 and Airwave, will lead the existing management team at Dolphin as CEO. Commenting on the acquisition, Tony Greaves says: "We believe that with the right strategy, sound execution, and secure funding, Dolphin can be turned around. We will continue to provide a good service, a reliable network and win new business customers in niche markets where demand for "push-to-talk" services is high." Chris Bataillard, CEO of Inquam, added: "This acquisition is a reflection of Inquam's strategy in Western Europe to operate low frequency wireless networks for business users in niche markets. Inquam is a well-funded company and in an excellent position to turn the Dolphin business around." Inquam is a specialized wireless operator. With offices in London, the company was founded in April 2000, and is privately owned. Qualcomm, the leading U.S. telecommunications company and Omnia, a Middle Eastern fund are the two largest minority shareholders, each with a total investment commitment of US$200 million. GENERAL INSURANCE: Notice of Creditors' Meeting ----------------------------------------------- In the High Court of Justice (of England and Wales) Chancery Division Companies Court No 3346 of 2002 In the Matter of City General Insurance Company Limited and in the matter of the Companies Act of 1985 Notice is hereby given that, by an order dated May 24, 2002 made in the above matter the Court has directed that a meeting be convened of the Scheme Creditors (as defined in the scheme of arrangement referred to below) of the above-named company for the approving (with or without modification) a scheme of arrangement proposed to be made between the Company and the Scheme Creditors pursuant to section 425 of the Companies Act 1985, and that the meeting be held on July 12, 2002 at the offices of DLA, 3 Noble Street, London EC2V 7EE, United Kingdom, commencing at 10 am (London time). All Scheme Creditors are requested to attend at such place and time either in person or by proxy. Scheme Creditors may vote in person at the Meeting or may appoint another person, whether a Scheme Creditor or not, as their proxy to attend and vote in their place. A copy of the text of the Scheme and of the statement required to be provided to creditors pursuant to section 426 of the Companies Act 1985, as well as blank forms of proxy and voting forms, may be obtained by attending at, or in written application marked for the attention of David Evans to, the offices of the Company at Suite 208, Coppergate House, 16 Brune Street, London, EC1 7NJ, United Kingdom, before 4pm. KINGFISHER PLC: Castorama Lawsuit Before Lille Court Dropped ------------------------------------------------------------ Castorama Dubois Investissements (CDI) has withdrawn a case against Kingfisher before a trade court in Lille, western France, which would have delayed indefinitely the takeover plans of the British shareholder had it succeeded, The Times says. According to CDI, it voluntarily dropped the case because of the approval by Kingfisher's shareholders of a GBP2 billion rights issue to partly finance the takeover offer. The French group, which holds 42% of Castorama, had alleged in the suit that Kingfisher's proposal violated an agreement signed in 1998. It argued that the British chain lacked a coherent strategy for the Castorama DIY chain in France. CDI, however, clarifies that the dropping of the case does not mean that it will now accept the EUR67-a-share offer of Kingfisher. The group will wait for the opinion of Rothschild et Cie, the independent bank tasked to determine whether the offer is fair. The group believes shareholders deserve at least EUR70 per share. The group, meanwhile, reiterated their call for the replacement of Kingfisher CEO Sir Geoffrey Mulcahy. CDI warned that if Kingfisher fails to meet this demand, the U.K.-based company may have difficulty securing the cooperation of Castorama's French employees, the report says. MARCONI PLC: Ex-high-flying Blue Chip to Trade in Small-cap Index ----------------------------------------------------------------- After losing its place in the FTSE 100 blue-chip index, Marconi suffered Wednesday another humiliating demotion. From the mid- cap FTSE 250, Marconi will start trading at London Stock Exchange's small-cap index beginning June 24, says Reuters. The demotion comes as the exchange made its quarterly reshuffle of its indices Tuesday. Joining Marconi among the ranks of mid- cap firms are mobile networking firm Psion, mobile phone component maker Filtronic, Britain's number two cable firm Telewest Communications and healthcare products company Medisys. They were also dropped from the FTSE 250 list. Marconi's share closed at 6.55p, valuing the company at less than GBP200 million. The firm's share price has tumbled 99% from more than GBP12 at the peak of the technology boom in 2000. RAILTRACK PLC: Results of Investigation Into Contractor Working --------------------------------------------------------------- Railtrack plc announced July 12 that it has launched an immediate investigation into issues raised by a story in Monday's Evening Standard. All the companies and individuals mentioned in the article have been identified and evidence, including timesheets, pay-slips, exam papers, statements, was supplied to Railtrack's investigation team. The initial investigation has now been completed and Railtrack has taken the following action: - The track safety trainer has been suspended until further notice - The track safety trainer's competency certificates have been withdrawn - Railtrack has sent letters to all track safety-training providers reminding them of their duties and responsibilities - Railtrack has sent letters to all 'sponsors' to remind them of their responsibilities and correct procedures Railtrack is satisfied that the Bridgen employees identified in the article have not been working excessive hours or double shifts. Individual contractors are also reminding their employees of their responsibilities when undertaking supervisory duties (i.e., Controller of Site Safety (COSS), Lookout). Safety remains Railtrack's top priority and we will continue to work with the industry and its contractors to improve safety on our railways. RBG RESOURCES: London High Court Makes Windup Order Final --------------------------------------------------------- The High Court in London has formally ordered the liquidation of RBG Resources, the tin trader immerse in allegations of fraudulent deals, says Reuters. The news agency says the provisional liquidation ordered last month was upgraded to formal liquidation Wednesday during a hearing. A receiver, who will be tasked to pay debts by selling available assets and winding up the business, will be appointed shortly. The court ordered the windup upon a petition initiated by WestLB Panmure, the London-based arm of German bank Westdeutsche Landesbank Girozentrale (WestLB). The bank is seeking payment for GBP11 million worth of loans. Last month, Mr. Justice Laddie of the High Court opined that there was evidence indicating that the trading company may have indeed misled creditors by declaring bogus deals. Mr. Justice Laddie of the High Court said: "If these were not bogus [trades], there would be an enormous amount of money coming in... What is terribly noticeable is that there has not been any incoming money for nearly a month, and some has been outstanding for nearly three months." Stephen Smith, QC for the liquidators, said during the last hearing that the company is owed US$478 million from more than 100 trading partners around the world. The liquidators, from Grant Thornton, estimate about US$450 million of these funds are overdue. "You have a strong prima facie case of fraud - that US$400 million has gone 'walkies'... [But, if your case is correct] by the time you get to trial, there are going to be no assets left," Justice Laddie told Mr. Smith then. According to Troubled Company Reporter-Europe, the full extent of the fraud is not yet clear, but some sources close to the investigation are suggesting it could be more than US$600 million. Multi-millionaire Viren Rastogi, who was arrested during a raid by the Serious Fraud Office last month on the company's offices in Piccadilly, London, is named one of four defendants by the liquidators. The other three individuals are Gautan Majumdar and Anand Jain, both directors of RGB; and a senior manager. Liquidators are accusing the four of fabricating evidence of substantial trades that were used as collateral for loans from banks, TCR-Europe said. Meanwhile, Reuters disclosed that Grant Thornton had already sold RBG's tin smelter in the Bolivian town of Oruro. The deal was sealed early this month. The liquidator is now looking to sell the company's 50% stake in Bolivia's largest tin mine Huanuni. It is also looking for a buyer for the Vinto smelter. The Huanuni mine is located some 130 km southeast of the Bolivian capital of La Paz and produces 300 to 350 tonnes of refined tin a month, the news agency says. The Vinto smelter, which takes about 40% of its feedstock requirements from Huanuni, produces around 950 and 1,000 tonnes of refined tin a month, contributing around five percent to world tin output. UNIQ PLC: CEO Puts up "For Sale" Sign on Yogurt, Spreads Units -------------------------------------------------------------- Analysts welcome the decision of three-month-old CEO Bill Ronald to sell the St Ivel yogurts and spreads divisions, calling it "a sensible move," says the Independent. The two businesses of St Ivel are expected to fetch as much as GBP100 million, with the yogurt division accounting for GBP30 million. The success of this disposal will mark the first major step towards the group's target of bringing its GBP185 million debts to just below GBP100 million in the next 12 months. "We were well below the economic scale required to be an efficient yogurt player in the UK. [The business] was an obvious candidate for sale given the strength of [its low-calorie] Shape brand," Mr. Ronald told the Independent. The chief, who comes from Mars and the fourth at the helm in the last 18 months, said discussions with potential buyers are now in "advanced" stages. It is thought that France's Danone is leading the bidding, says the paper. As regard the spreads division, which includes the Utterly Butterly and Vitalite brands, Mr. Ronald expects a buyer within the year. He said maintaining this unit no longer fits the group's move to focus on own-label and franchised operations. Mr. Ronald pledged before the shareholders meeting recently that he would turnaround the business in 12 months. He said his experience at the US giant Mars had trained him to look "very closely at where the consumer is going and where the money is - it's in chilled convenience food." The company recently reported pre-tax profits of only GBP23.1 million for the year to March 31, down from GBP57.5 million last year. The Independent says this poor performance was partly due to the losses at St Ivel yogurts and its French ready-made meals unit. *********** 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, Maria Lourdes Reyes, Jean Claire Dy, Editors. Copyright 2002. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *