/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/020906.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, September 6, 2002, Vol. 3, No. 177 Headlines * B E L G I U M * LERNOUT & HAUSPIE: Court Okays Dictaphone Transition Agreement * C Z E C H R E P U B L I C * ELEKTRIM SA: Analysts Say Bankruptcy Only 'A Matter of Time' * F R A N C E * VIVENDI UNIVERAL: Class Period for Action Extended VIVENDI: Wechsler Harwood Announces Expanded Class Period * G E R M A N Y * KIRCHMEDIA: Trimming Workforce by 34 Percent Next Year MOBILCOM AG: Schmid Willing to Give up Majority Control for EUR14 * I R E L A N D * AIB: Rumored Sale of American Unit Hoists Share Value ELAN CORPORATION: Gets U.S. FDA Nod on Two Drug Applications JEFFERSON SMURFIT: Announces Major Interest of Goldman Sachs JEFFERSON SMURFIT: Changes Board of Directors JEFFERSON SMURFIT: Notification of Major Interests in Shares LM ERICSSON: Stock Sale May Not Sustain the Company Through 2003 * I T A L Y * FIAT: Sales Below that of Rivals Despite Government Incentive FIAT: Considers Reducing Output * S W I T Z E R L A N D * ABB LTD: Sells Commercial Finance for US$ 2.3 Billion to GE SWISSAIR: SairGroup Finance Unit to Issue Receivables * U N I T E D K I N G D O M * BALDWINS INDUSTRIAL: Looks to Alvarez for Restructuring Advice COMPASS GROUP: Ogier Subscribes for 9,834 Shares in Compass TELEWEST: Expects Debt Negotiations to Proceed Quickly TELEWEST: Shareholders Approve Disposal of Interest in SMG Plc TELEWEST: Expects Debt Negotiations to Proceed Quickly WESCOL GROUP: Halves Workforce While Struggling to Collect Cash WORLDCOM: Ruling to Drag on, Plea Negotiations Continue ============= B E L G I U M ============= LERNOUT & HAUSPIE: Court Okays Dictaphone Transition Agreement -------------------------------------------------------------- L&H NV and L&H Holdings USA Inc., obtained the Court's authority to: (i) sign a Transition Services Agreement with Dictaphone Corporation, (ii) pay Dictaphone USD16,250 for services rendered by Dictaphone personnel to L&H NV for the postpetition period from January 1, 2002, and June 30, 2002, and (iii) provide Dictaphone with an Allowed Administrative Claim for USD5,265 against L&H Holdings for services rendered by Dictaphone personnel to Holdings for the postpetition period from January 1, 2002 to June 30, 2002. Prior to Dictaphone's emergence from its Chapter 11 case, some of its personnel provided legal and accounting services to the L&H Debtors. Dictaphone has been reimbursed for the costs of these services through December 31, 2002, in accordance with the Court- approved intercompany allocation in May 2001. Donna L. Harris, Esq., at Morris Nichols Arsht & Tunnell, relates that Dictaphone and the L&H Debtors have negotiated the terms of a Transition Agreement, under which Dictaphone will, as of July 1, 2002, continue to provide certain services to the L&H Debtors in exchange for a pre-determined fee arrangement. The parties have also agreed that, for services rendered by Dictaphone personnel to the L&H Debtors during the postpetition period between January 1, 2002 and June 30, 2002, Dictaphone will be reimbursed USD16,250 by L&H NV and USD5,265 by Holdings. The pertinent terms of the Transition Services Agreement are: (1) Services Provided to L&H NV Dictaphone personnel will assist L&H NV in: (i) the management of its United States cash account; ii) facilitation of the liquidation process -- i.e., development and implementation of procedures for distributions under the plan of liquidation, voting process for the liquidation plan, confirmation process, claims reconciliation, monitoring Bankruptcy Court pleadings and creditor settlement agreements; (iii) payment of professional fees; and (iv) preparation and filing of United States tax returns. (2) Services Provided to Holdings Dictaphone personnel will assist Holdings as needed in: (i) the management of its United States cash account; (ii) facilitation of the liquidation process -- i.e., development and implementation of procedures for distributions under the plan of liquidation, voting process for the liquidation plan, confirmation process, claims reconciliation, including review of existing work, monitoring Bankruptcy Court pleadings and creditor settlement agreements; (iii) payment of professional fees; (iv) advice regarding insurance issues; and (v) assistance with Blue Cross receivables. (3) Reimbursement The L&H Debtors will be invoiced monthly for actual time incurred, plus actual out-of-pocket expenses, if any. The L&H Debtors will reimburse Dictaphone for fees and expenses charged by the Dictaphone personnel within five days of receiving the monthly invoice from Dictaphone. (4) Rates USD125 per hour for Jo-Ann Hamilton and Tim Ledwick USD85 per hour for tax services These rates will be charged effective July 1, 2002. The time charged for the Services rendered by Ms. Hamilton and Mr. Ledwick to either L&H NV or Holdings will not exceed 50 hours in any one month without the prior written approval of the L&H Debtors. (5) Reimbursement to Dictaphone for Services from January 1 to June 30, 2002 Dictaphone will be reimbursed for services provided to the L&H Debtors between January 1, 2002 and June 30, 2002 as: (i) USD16,250 to be paid by L&H NV -- i.e., 5 hours per week for 26 weeks at the rate of USD125 per hour, and (ii) USD5,265 from Holdings -- 1 hour per week for 26 weeks at the rate of USD125 per hour, plus compensation for certain tax- related services and expenses incurred -- to be deemed an Allowed Administrative Claim. (6) Treatment of Dictaphone Fees and Expenses Under Holdings Plan The fees and expenses payable by Holdings to Dictaphone will be deemed to be Allowed Administrative Claims under the Holdings Plan. Allowed Administrative Claims, including those held by Dictaphone, are proposed to be paid in whole or in part with common stock of ScanSoft. (7) Term Dictaphone personnel will continue to provide these services to the L&H Debtors until the terms of the respective liquidating plans of L&H NV and Holdings are implemented and the distributions process under each plan is complete. The L&H Debtors, who are in the process of liquidating their businesses and winding up their operations, have determined that their own personnel are unable to perform these services. According to Ms. Harris, these services are indispensable to the successful liquidation of the L&H Debtors through their respective Chapter 11 liquidating plans. Dictaphone personnel have performed similar services for the L&H Debtors since the Petition Date. Furthermore, Ms. Harris explains, the retention of third-party professionals to provide these services at this stage of the L&H Debtors' Chapter 11 cases would be extremely inefficient and more expensive than obtaining the services from Dictaphone under the Transition Agreement. Not only are they intimately familiar with the affairs of the L&H Debtors and the functioning of their Chapter 11 cases, Ms. Harris says, the Dictaphone personnel have been performing similar services for a considerable period of time and can continue to do so in an efficient and cost-effective manner. (L&H/Dictaphone Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) =========================== C Z E C H R E P U B L I C ============================ ELEKTRIM SA: Analysts Say Bankruptcy Only 'A Matter of Time' ------------------------------------------------------------ The decision by Elektrim SA to pull out of a life-saving debt restructuring recently has puzzled analysts, but they believe the company could go bust anytime soon, says Warsaw Business Journal. "I'm convinced that the bondholders will not want to sit around the negotiating table again. Filing for bankruptcy is only a question of time," Magdalena Lapsa, an analyst with SG Securities, told the paper recently. Bondholders appear to have softened, though, showing signs of cooperating with the company's debt restructuring agreement negotiated in July, Troubled Company Reporter-Europe said Wednesday. Accordingly, bondholders see a future compromise over the company's repayment of EUR440 million (US$447 million) in defaulted bonds. A creditor's representative disclosed that the group had signed in writing to convene again, if necessary, in case the company defaulted on its forthcoming December obligations. The conglomerate refused to sign the restructuring agreement as the management board sees it unlikely for the Company to meet the contemplated terms of the bond restructuring, which includes initial redemption of EUR100 million in bonds within five days of signing. A second EUR100 million payment is afterwards due in December, while another payment is as well stipulated after the sale of its telecom unit, ET, with the final payment coming in June 2004. Chief Executive Officer Maciej Radziwill warns that the company may be liquidated if the bondholders pushed their demands. The agreement was approved by 86% of bondholders and creditors are determined to push it, negotiating again if necessary. The bondholders had previously demanded full repayment of the bonds as well interest and compensation from the company, which defaulted on the bond December 15, TCR-Europe said, citing The Deal. Former Elektrim President Waldemar Siwak, meanwhile, believes bondholders will return to the negotiating table and would probably accept an equity-for-debt arrangement. Elektrim has US$540 billion of liabilities, some EUR440 million of which are in defaulted bonds and interest. A Warsaw judge redirected the creditor's filing for the Company's bankruptcy in January to a restructuring agreement. =========== F R A N C E =========== VIVENDI UNIVERAL: Class Period for Action Extended --------------------------------------------------- The following statement was issued Wednesday by the law firm of Schiffrin & Barroway, LLP: Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Southern District fo New York on behalf of all purchasers of the common stock of Vivendi Universal, S.A. (NYSE:V) common stock and American Depository Receipts (ADRs) during the period between October 30, 2000 and August 13, 2002, inclusive. If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Schiffrin & Barroway, LLP (Marc A. Topaz, Esq. or Stuart L. Berman, Esq.) toll free at 1-888-299- 7706 or 1-610-667-7706, or via e-mail at info@sbclasslaw.com The complaint charges Vivendi Universal, S.A. and certain of its officers and directors with issuing false and misleading statements concerning its business and financial condition. Specifically, the complaint alleges that prior to and during the Class Period, defendant Jean-Marie Messier took Vivendi on an acquisition binge that, according to published reports, resulted in the Company amassing approximately $18 billion in debt as he turned the Company from a water concern into an entertainment powerhouse. During the Class Period, defendants made misrepresentations and/or omissions of material fact, including the following: (a) Misstating Vivendi's cash position and ability to service its debt obligations; (b) Misstating Vivendi's earnings in its public filings with the SEC and elsewhere as a result of failing to record write-downs of goodwill and other intangible assets associated with, inter alia, the acquisition of U.S. Filter, the equity investment in Elektrim Telekomunikacja, and the merger among Vivendi, Seagram and Canal+ long after it had become apparent that such assets were being carried at values vastly higher than their true; ( c) Failing to disclose that the exchange ratio for the merger between MP3.com, Inc. and Vivendi was distorted due to artificial inflation in the price of Vivendi American Depositary Receipts; and (d) Failing to disclose that Vivendi had significant off-balance-sheet liabilities, including undisclosed sales of put options on tens of millions of dollars worth of Vivendi shares during 2001. During the Class Period, defendants' false statements artificially inflated Vivendi ADRs to as high as $75.00 per ADR. Defendants reported favorable, but misleading, financial results to the market and represented that Vivendi was not as susceptible to economic problems as competitors and that the Company had the "highest resiliency and lowest sensitivity to recessionary environment." The defendants also represented that Vivendi was successfully implementing recent mergers which were being reorganized quickly to generate synergies. These positive but false statements allowed the Company to complete additional acquisitions in its $100 billion buying spree between 1998 and 2001. Late in June 2002, news leaked from Vivendi that its debt was at alarming levels, causing Vivendi's ADRs to decline in price from $28 to $20. Vivendi's ordinary shares declined in similar fashion. Nonetheless, Messier reassured the market that liquidity was not a problem. However, as ratings agencies continued to downgrade the Company's debt, the ADRs and ordinary shares continued to decline. On July 2, 2002, Vivendi's debt was downgraded again and the Company was in danger of default. On July 3, 2002, Messier was forced to resign. Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin & Barroway, LLP, which prosecutes class actions on behalf of investors and shareholders. For more information on Schiffrin & Barroway, or to sign-up to participate in this action online, please visit http://www.sbclasslaw.com/cgi/signup.cgi If you are a member of the class described above, you may, not later than September 16, 2002, move the Court to serve as lead plaintiff of the class, if you so choose. In order to serve as lead plaintiff, however, you must meet certain legal requirements. More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca. CONTACT: SCHIFFRIN & BARROWAY, LLP Marc A. Topaz, Esq. Stuart L. Berman, Esq. Phone: 1-888-299-7706 (toll free) (610) 667-7706 E-mail: info@sbclasslaw.com VIVENDI: Wechsler Harwood Announces Expanded Class Period --------------------------------------------------------- On August 29, 2002, the law firm of Wechsler Harwood LLP. (http://www.whhf.com)filed an amended class action suit against Vivendi Universal, S.A. (NYSE:V) and certain of its principal officers and directors in the United States District Court for the Southern District of New York on behalf of all persons or entities who purchased or otherwise acquired Vivendi securities between October 30, 2000 and August 13, 2002. The complaint alleges that defendants violated the federal securities laws by issuing materially false and misleading statements throughout the Class Period that had the effect of artificially inflating the market price of Vivendi's securities. Prior to and during the Class Period, defendant Jean-Marie Messier took Vivendi on an acquisition binge that, according to published reports, resulted in the Company amassing approximately $18 billion in debt as he turned the Company from a water concern into an entertainment powerhouse. During the Class Period, defendants made misrepresentations and/or omissions of material fact, including the following: (a) Misstating Vivendi's cash position and ability to service its debt obligations; (b) Misstating Vivendi's earnings in its public filings with the SEC and elsewhere as a result of failing to record write-downs of goodwill and other intangible assets associated with, inter alia, the acquisition of U.S. Filter, the equity investment in Elektrim Telekomunikacja, and the merger among Vivendi, Seagram and Canal+ long after it had become apparent that such assets were being carried at values vastly higher than their true values; (c) Failing to disclose that the exchange ratio for the merger between MP3.com, Inc. and Vivendi was distorted due to artificial inflation in the price of Vivendi American Depositary Receipts; and (d) Failing to disclose that Vivendi had significant off- balance-sheet liabilities, including undisclosed sales of put options on tens of millions of dollars worth of Vivendi shares during 2001. During the Class Period, defendants' false statements artificially inflated Vivendi ADRs to as high as $75.00 per ADR. Defendants reported favorable, but misleading, financial results to the market and represented that Vivendi was not as susceptible to economic problems as competitors and that the Company had the "highest resiliency and lowest sensitivity to recessionary environment." The defendants also represented that Vivendi was successfully implementing recent mergers which were being reorganized quickly to generate synergies. These positive but false statements allowed the Company to complete additional acquisitions in its $100 billion buying spree between 1998 and 2001. Late in June 2002, news leaked from Vivendi that its debt was at alarming levels, causing Vivendi's ADRs to decline in price from $28 to $20. Vivendi's ordinary shares declined in similar fashion. Nonetheless, Messier reassured the market that liquidity was not a problem. However, as ratings agencies continued to downgrade the Company's debt, the ADRs and ordinary shares continued to decline. On July 2, 2002, Vivendi's debt was downgraded again and the Company was in danger of default. On July 3, 2002, Messier was forced to resign. If you purchased or otherwise acquired Vivendi securities during the period from October 30, 2000 through August 13, 2002 inclusive, you may, no later than September 16, 2002, move to be appointed as a Lead Plaintiff. A Lead Plaintiff is a representative party that acts on behalf of other class members in directing the litigation. The Private Securities Litigation Reform Act of 1995 directs courts to assume that the class member(s) with the "largest financial interest" in the outcome of the case will best serve the class in this capacity. Courts have discretion in determining which class member(s) have the "largest financial interest," and have appointed Lead Plaintiffs with substantial losses in both absolute terms and as a percentage of their net worth. If you have sustained substantial losses in Vivendi securities during the Class Period, please contact Wechsler Harwood LLP. CONTACT: WECHSLER HARWOOD LLP 488 Madison Avenue, 8th Floor New York, New York 10022 Toll Free Telephone: (877) 935-7400 Contact: David Leifer, Shareholder Relations Department E-mail: dleifer@whhf.com ============= G E R M A N Y ============= KIRCHMEDIA: Trimming Workforce by 34 Percent Next Year ------------------------------------------------------ KirchMedia GmbH & Co. KGaA, the core rights trading business of German media conglomerate KirchGruppe will slash 34 percent of its 544-person workforce by the end of 2003, Dow Jones reports. Citing management and workers, the report said 82 will leave the company by the end of the year and 69 others will follow by 2003. Some will be employed in other units of the company. The target is to retain only 355 workers. Kirchmedia filed for insolvency in April after weeks of negotiating a rescue pact from banks and investors. Under the Company's restructuring plan, KirchMedia will be put under "self-administration" wherein a new management will run the company under limited supervision from a court-appointed administrator. KirchMedia is the company in the KirchGruppe responsible for commercial free-television, fiction and sports rights trading, New Media, film and TV production and for technical services. With its subsidiaries, equity investments and joint ventures, it covers the entire value-added chain available to the audiovisual industry. CONTACT: KIRCHMEDIA GMBH & CO. KGAA Robert-B�rkle-Str. 2 85737 Ismaning Phone: 089 / 9956-2324 Fax: 089 / 9956-2330 MOBILCOM AG: Schmid Willing to Give up Majority Control for EUR14 ----------------------------------------------------------------- MobilCom majority shareholder Gerhard Schmid is willing to lower his 22-euro asking price for each of his 49% shareholding and expects France Telecom to make an offer before September 12, says AFX News. Just two months ago, the feisty former CEO, who received his walking papers late June, insisted MobilCom shareholders deserve 22 euros for their shares. At the time, France Telecom insiders had said the group is only willing to offer 10 euros. MobilCom shares peaked at 175 euros in 2000. Mr. Schmid insisted then that, under German law, any bid for the rest of the company's shares would have to match the weighted average price of the share over the past three months, which would produce a price of some 15 euros a share. But in a recent interview, Mr. Schmid appeared to have softened his position. He told Die Welt that 14 euros apiece is now acceptable. But French newspaper Le Figaro reported over the weekend that the French telecom is not planning to bid for control of MobilCom, preferring to pull the plug, instead. Accordingly, the French group's chairman and CFO favor this option, which if executed will inevitably force the German affiliate into bankruptcy. The French government, however, opposes this plan for political reasons. The government controls 54% of France Telecom. Last Thursday France Telecom delayed the publication of its first half report to September 13 while it finds a solution to the MobilCom problem. Mr. Schmid expects France Telecom to make an offer before the next meeting of its supervisory board on September 12. Meanwhile, Mr. Schmid told Die Welt he plans to expand his 100% owned company MobilCom Inkasso GmbH (MFI), after divesting his shares in MobilCom AG. He said a "handful" of MobilCom employees have already moved to this new company. ============= I R E L A N D ============= AIB: Rumored Sale of American Unit Hoists Share Value ----------------------------------------------------- Shares of Allied Irish Banks rose Wednesday on news that it might cut its connection with Allfirst, the Company's American subsidiary involved in a GBP400 million frauds early this year. AIB had put the unit under review after revelations that its currency trader, John Rusnak has hidden losses, says The Guardian. The report led to the ouster of chairman Frank Bramble and chief executive Susan Keating. Mr. Rusnak was also charged in his involvement in the fraud. Analysts at Fox-Pitt, Kelton, regarded the possible sale as "strategically positive." It is also hoped to allay rumors about the sale of AIB itself. Allfirst's profit dropped 25 percent in the half-year report. The Company is regarded as a hole in the group's business. Although analysts are expecting the sale to be formally announced as early as the end of the month, the report also said that the Allied Irish group may also opt to retain the business by operating it on a smaller scale. Rumored buyer for the unit includes a local American bank, and Citizens, an arm of Royal Bank of Scotland. AIB refused to make comment although it admitted the matter was indeed discussed in the board meeting. ELAN CORPORATION: Gets U.S. FDA Nod on Two Drug Applications ------------------------------------------------------------ The fortunes of Elan Corporation Plc are looking good again after receiving approval from the U.S. Food and Drug Administration for new versions of its Zanaflex and Skelaxin drugs. Dow Jones Newswires says the approval was given to the supplemental new drug application for an 800 milligram-strength Skelaxin tablet. The drug is used to treat acute, painful musculoskeletal conditions. Also approved was the new drug application for two-milligram, four-milligram and six-milligram tizanidine hydrochloride, or Zanaflex, in capsule form. Zanaflex is a treatment for spasticity, the newswire says. In late July, the company unveiled a sweeping restructuring plan, including a cut of two-thirds of its 4,700-member work force. Under the plan it also shed US$1.5 billion of assets and narrowed its focus to three therapeutic areas. The company's shares have been battered in the market, falling more than 95% this year due to concerns about its accounting practices, which led to several investigations by U.S. regulators. Elan shares declined 0.3% to 303 pence (US$4.73 or EUR4.76) in Wednesday afternoon trading in London. JEFFERSON SMURFIT: Announces Major Interest of Goldman Sachs ------------------------------------------------------------ Name of company: Jefferson Smurfit Group plc Name of shareholder having a major interest: The Goldman Sachs Group Inc. Goldman Sachs Securities (Nominees) Limited: 1,862,079 Goldman Sachs International: 84,726,614 Date of transaction: 3 September 2002 Date company informed: 4 September 2002 Total holding following this notification: 84,726,614 Total percentage holding of issued class following this notification: 7.8% CONTACT: Cathy Smith Phone: +353 1 2027000 JEFFERSON SMURFIT: Changes Board of Directors ---------------------------------------------- Jefferson Smurfit Group plc (http://www.smurfit-group.com) announces the appointment of Ian J. Curley, Samuel M. Mencoff, John A. Canning, Jr., Justin S. Huscher, Christopher J. McGowan, Thomas S. Souleles, William S. Kirsch and Richard J. Campbell, Jr. to and the resignation of Howard E. Kilroy, Peter Gleeson, J.B. Malloy, James O'Dwyer, Ray Mac Sharry, Martin Rafferty, Patrick Wright, Albert Reynolds, Mary Redmond and James R. Thompson from the Board of Directors of the Company. Such appointments and resignations became effective upon the offer for the entire issued and to be issued share capital of the Company by MDCP Acquisitions I becoming wholly unconditional. CONTACT: Mary Finan WHPR Phone: (+353 1) 669 0282 (+353 87) 231 6458 JEFFERSON SMURFIT: Notification of Major Interests in Shares ------------------------------------------------------------ Name of company: Jefferson Smurfit Group plc Name of shareholder having a major interest: Credit Suisse First Boston Equities Ltd. Name of the registered holder(s) and, if more than one holder, the number of shares held by each of them: Credit Suisse First Boston Equities Ltd. Number of shares/amount of stock acquired': 2,172,429 Percentage of issued class: 0.2% Class of security: Ordinary Date of transaction: 30 August 2002 Date company informed: 3 September 2002 Total holding following this notification: 120,645,776 Total percentage holding of issued class following this notification: 10.8% Contact Information: Cathy Smith Telephone: +353 1 2027000 Name and signature of authorised company official responsible for making this notification: Cathy Smith, Group Secretarial Manager Date of notification: 3 September 2002 LM ERICSSON: Stock Sale May Not Sustain the Company Through 2003 ---------------------------------------------------------------- Ericsson AB may be pressured to find alternative source of funding aside from stock sales in the coming year, investors observe. The Company has recently launched a SEK30 billion (US$3.2 billion) stock sale, the country's biggest secondary offering so far, selling stock at SEK3.80. The Swedish company sold shares at 1992 prices after a collapse in demand for phone gear made it register its first loss in more than five decades in 2001, Bloomberg reports. The Company, who saw its market value dropped by $182 billion, has been consuming SEK1.4 billion in cash a month. Although earlier Financial Times report cited Chairman Michael Treschow saying that the share sale would tide the Company over profitability, concerns loom over the Company's future when losses increase and bank payments draw near next year. The Company plans to pay SEK40 billion in debt and severance over the next 16 months, as well as repay SEK22 billion debt by the end of 2003. It also faces SEK17.5 billion costs for firing employees. Ericsson's cash was down from SEK8.4 billion to SEK47.6 billion in the second quarter due to reduced sales as it pays back loans. Moody's and SP reduced Ericcson's credit rating to junk as the Company's cash reserve dwindled. Added to that is the forecast of reduced sales of cellular networks by more than 15 percent this year. A further slackening in the market is also expected next year due to phone companies delaying building networks that offer higher data transmission speeds. Merril Lynch & Co estimates mobile-network sales to drop 13 percent in 2003. The decline in sales also prompted Moody's to cut Ericsson's credit rating four levels in the past year. The downgrades entitled banks to repayment on as much as SEK9.8 billion in customer credits. Investors also believe asset sales will probably not help in the Company's bid to raise funds. The Company has little left to sell after shedding US$2.6 billion worth of assets last year. CONTACT: TELEFONAKTIEBOLAGET LM ERICSSON Telefon AB LM Ericsson, Telefonv"gen 30 SE-126 25 Stockholm, Sweden Phone: +46-(0)8-719-0000 Fax: +46-(0)8-18-40-85 Home Page: http://www.ericsson.com ========= I T A L Y ========= FIAT: Sales Below that of Rivals Despite Government Incentive ------------------------------------------------------------- Government incentives failed to pull Fiat's car sales last month. The Italian company's new car registrations fell 11.4 percent, or four times compared to that of rivals, Financial Times reports. The result failed expectations of the government to boost sales by allowing consumers to avoid paying the annual license fee since early July for three years if they trade-in a car without a catalytic converter by the end of 2002 and buy a new small car. Fiat, which specializes in small models, was expected to benefit from this. The company's domestic sales fell by 20 per cent this year and its market share went down from 34.6 percent to 31.4 percent. Creditors moved for drastic restructuring and refinancing plan in May when the Company's domestic slide resulted to a first-half loss. Shareholders are expected to approve the Company's restructuring plan next week. Rumors were running that the industrial group may sell control of its car division, Fiat Auto to General Motors. Fiat meanwhile agreed with two of Italy's three main trade unions to cut 550 employees at Powertrain, a joint venture with GM. Fiat will continue serving temporary lay-off notices to workers until October. The lay-offs are expected to affect 4,500 assembly line workers. It is expected to cut production by 13, 500 vehicles next month. CONTACT: FIAT SPA 250 Via Nizza 10126 Turin, Italy Phone: +39-011-686-1111 Fax: +39-011-686-3798 Toll Free: 800-804027 Home Page: http://www.fiatgroup.com/e-index.htm FIAT: Considers Reducing Output ------------------------------- Italian car manufacturer Fiat SpA is mulling over reducing the production of larger models by 13,500 units this coming October, which can possibly result in more than a thousand job cuts, a report from the Wall Street Journal says. Fiat's latest plan will likely affect an estimated 3, 900 workers during the month and adds on the copious work stoppages earlier this year. October's cutbacks are equal to about 2.5 days of normal production, the paper reports. Moreover, the auto-maker's decision came on the same day it revealed the that registrations of new Fiat-branded cars fell 12.32% on the year to 23,123 units in Italy. The auto maker's other brands, Alfa Romeo and Lancia, saw sales rise 4.02% to 3,470 vehicles and tumble 17.33% to 3,960 cars, respectively, the daily says. Sources say the figures denote Fiat's auto division may be going towards recovery, the paper adds. ===================== S W I T Z E R L A N D ===================== ABB LTD: Sells Commercial Finance for US$ 2.3 Billion to GE ----------------------------------------------------------- ABB, the global power and automation technology group, said Wednesday it has signed an agreement to sell most of its Structured Finance business to GE Commercial Finance for total cash proceeds, including equity and debt, of about US$ 2.3 billion. ABB's net debt will be cut by the same amount. "The sale of Structured Finance is an important step in our ongoing program to strengthen the balance sheet, and allows us to cut net debt by US$ 2.3 billion," said J"rgen Centerman, president and CEO of ABB. "The divestment of this activity is fully in line with our strategy to focus on power and automation technologies for industry and utility customers." Centerman reaffirmed ABB's targets for 2002 of an EBIT margin of 4-5 percent and flat revenues. The divestment of Structured Finance is subject to customary regulatory approvals. "With the sale of Structured Finance, we are confident that we will reach our target of reducing net debt by at least US$ 1.5 billion this year from US$ 4.1 billion at the end of 2001," said Peter Voser, ABB's chief financial officer. At the end of the first half of 2002, net debt had increased to US$ 5.2 billion. Voser said: "The additional net debt reduction needed to meet our targets this year will be achieved through stronger net cash from operations in the second half of 2002 and other asset sales, including real estate." ABB said it will use the cash from the sale to repay scheduled debt maturing in the fourth quarter of this year - including its bank facility, commercial paper and bonds - of about US$ 1.2 billion. The remainder of the cash will be used to repay other debt maturing mainly next year. The Structured Finance portfolio being divested includes global infrastructure financing, equipment leasing and financing businesses. As previously announced, ABB will retain some US$ 0.9 billion in leasing assets related to its core businesses, representing about 15 percent of the total Structured Finance business area assets. ABB will retain its Financial Advisory unit (75 employees) which mainly serves ABB's industrial divisions with advice on arranging financing for customer projects. Under the agreement GE Commercial Finance will: (i) acquire total assets of about US$ 3.8 billion, including the US$ 3.4 billion loan and lease portfolio. (ii) pay about US$ 400 million for Structured Finance equity, which represents a discount of 2 percent on the underlying book value of the loan and leasing receivables portfolio. (iii) pay ABB US$ 1.9 billion to cover Structured Finance net debt (US$ 2.1 billion in debt minus US$ 200 million cash already on Structured Finance's balance sheet). (iv) assume other liabilities of about US$ 1.2 billion. With equity and debt payments, and after transaction costs, total cash proceeds for ABB will be about US$ 2.3 billion. The 2 percent discount on the US$ 3.4 billion loan and lease portfolio, the transaction costs related to the deal and provisions, correspond to a book loss of around US$ 125 million. This amount will be booked as discontinued operations and will not affect EBIT. Not included in the divestment are: the ABB Export Bank, ABB's 35 percent equity stake in the Swedish Export Credit Corporation, and the aircraft leasing business. ABB is in negotiations to divest some or all of these businesses, whose total book asset value was about US$ 0.9 billion at the end of June 2002. Structured Finance, part of the Financial Services division, employs 500 people in 11 countries. ABB will host a conference call for analysts and investors at 16:30 CET today, 4 September, 2002. If you wish to listen, call: +41 91 610 41 11 (Europe and rest of world), 1 412 858 46 00 (U.S.). There will be a digital playback for 72 hours commencing 2 hours after the conference. Participants requesting the digital playback should dial: +41 91 612 4330 (in Europe) or +1 412 858 1440 (in U.S.) and will be asked to enter the conference ID 010 followed by the # sign. ABB (www.abb.com) is a global leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impacts. The ABB Group of companies operates in more than 100 countries and employs about 150,000 people. CONTACT: ABB LTD Investor Relations Switzerland Phone: +41 43 317 3804 Sweden Phone: +4621 325 719 USA Phone: +1 203 750 7743 E-mail: investor.relations@ch.abb.com SWISSAIR: SairGroup Finance Unit to Issue Receivables ----------------------------------------------------- SAirGroup Finance Inc., which filed for Chapter 11 protection in U.S. Bankruptcy Court Tuesday will sell receivables while it consumes cash reserves for 30 days and delay post-petition financing. The Delaware-based unit filed for bankruptcy after it defaulted on interest payment due on US$393.89 million in outstanding notes guaranteed by direct parent SAirGroup, The Deal reports citing the Company's filings. SairGroup Finance has US$582.09 million in debt and US$460.16 million in total assets according to the filing. The unit, which was set up in 1999 to help SwissAir also issued US$350 million in 7.5% guaranteed notes due 2004 to raise capital for parent SAirGroup. James Roome of Bingham McCutchen LLP in London represents the committee of noteholders. The Company's largest unsecured creditor is Bank of America from which it has a US$56 million loan. BoFA cancelled SAirGroup Finance's US$155 million credit line on October 2, 2001, when Swissair and SAirGroup began bankruptcy proceedings in Zwitzerland. The case is under the courts in Zurich and Basel. Scott Talmadge at Clifford Chance LLp in York is BoFA counsel. SwissAir and SAirGroup have related bankruptcy proceedings in the US. SairGroup Finance has hired David Frauman, Hugh McDonald and James Atkins of Allen Overy in New York as attorneys. CONTACT: SWISSPORT BASEL LTD (SAIRGROUP) Basle/Mulhouse Airport, Switzerland, Home Page: www.swissport.com =========================== U N I T E D K I N G D O M =========================== BALDWINS INDUSTRIAL: Looks to Alvarez for Restructuring Advice -------------------------------------------------------------- Baldwins Industrial Service, Inc., and Baldwins Leasing, LP ask the U.S. Bankruptcy Court for the Southern District of Texas for permission to employ Alvarez & Marsal, Inc., to give them restructuring advice. The Debtors wish to engage Alvarez & Marsal as their restructuring advisors because of Alvarez & Marsal's prepetition employment as the Debtors' restructuring advisors. The cost and delay of obtaining and educating new restructuring advisors who do not possess the extensive knowledge of the Debtors' financial history would be detrimental to the Debtors' reorganized efforts. Specifically, Alvarez & Marsal's will: 1) provide assistance in the identification, evaluation and implementation of options for the Debtors to accomplish a resolution to its financial distress through an in court or out- of-court process; 2) review all of the Debtors agreements for borrowed money and lease financing and summarizing the pertinent information in a chart with a more detailed written description of each agreement attached as well as evaluate the structure of the Debtors financing and leasing obligation; 3) provide assistance in the development of a receipts and disbursements cash flow analysis and forecast and other analysis and forecasting tools; 4) evaluate the potential for the Debtors to obtain financing in support of an in-court or an out-of-court restructuring as assist in arranging such financing if required; 5) provide pre-bankruptcy planning and implementation assistance as may be necessary with the Debtors' counsel; 6) provide assistance in the filing and administration of an in- court restructuring, including compliance with the reporting, administrative and informational requirement of an in-court restructuring including the development of an order authorizing the use of Cash Collateral, Disclosure Statements and Plan of Reorganization, Schedules and Statements of Financial Affairs, Monthly Operating Reports and other documents as requested by counsel or the Debtors; 7) assist in communication and negotiations with creditors and other parties involved; 8) provide assistance in the identification and evaluation of preferential or voidable transactions, if necessary; 9) provide expert testimony as may be necessary and acceptable to Alvarez & Marsal; 10) prepare a liquidation analysis; 11) provide transactional assistance relative to the plan of reorganization; and 12) provide other assistance, potentially inclusive of management assistance, as may be requested by the Debtor and subject to Alvarez & Marsal's approval. Alvarez & Marsal's current hourly rates are: Managing Directors USD450 - USD520 per hour Directors USD325 - USD400 per hour Associates USD250 - USD325 per hour Analysts USD180 - USD225 per hour Baldwins Industrial Services Inc., and Baldwins Leasing LP filed for chapter 11 protection on August 26, 2002. Jack M. Partain, Jr., Esq., at Fulbright & Jaworksi represents the Debtors in their restructuring efforts. When the Company filed for chapter 11 protection it listed assets of not more than USD10 million and estimated debts at not more than USD50 million. CONTACT: BALDWINS INDUSTRIAL SERVICES PLC Churchill House 1 London Road, Slough Berkshire SL3 7RL United Kingdom Telephone: (01753) 512 100 Fax: (01753) 512 402 E-mail: head.office@baldwins-cranes.co.uk Website: http://www.baldwinsplc.co.uk/ COMPASS GROUP: Ogier Subscribes for 9,834 Shares in Compass ------------------------------------------------------------ Compass Group PLC announces that on September 4, 2002, Ogier Employee Benefit Trustee Limited, as Trustee of the Compass Group Employee Trust, subscribed for 9,834 ordinary shares in the Company. The Shares were subscribed at 303p per Share, being the middle market quotation of a Share on September 3 2002. Following this acquisition, the Trustee distributed all the shares to satisfy participants' entitlements under the Compass Group Commitment Share Plan. Following the distribution of these shares, no shares are held by the Trustee. TELEWEST: Expects Debt Negotiations to Proceed Quickly ------------------------------------------------------- Telewest Communications Plc expects negotiations with creditors over the company's GBP5.3 billion (US$8.3 billion) debts to hasten, Bloomberg reports citing Managing Director Charles Burdick. Burdick, who replaced Chief Executive Adam Singer last month, admits the alternative are few, says the report. There are plans to swap control with bondholders for GBP3.6 billion of debts. In August, the Company was allowed by the banks, from which it owed GBP1.8 billion, to start negotiating with bondholders. The swap is seen to result to the long-awaited merger with NTL, Telewest's U.K. cable rival, which has just emerged from Chapter 11 bankruptcy protection in the US. Telewest, together with NTL Inc., accumulated more than US$25 billion of debt building fiberoptic networks and acquiring rival businesses during the Internet boom. The Company lost more than EUR16.3 billion in market value due to low demand in their digital TV and Internet services. Shaers fell to 1.4 pence from 569.75 p in 2000. Meanwhile, the cable company denied yesterday's reports that it will cut 1,000 jobs after the 1,500 slashes it made in May, although it admitted the workforce may sink in the next few years. Telewest was founded in 1984 to provide cable-TV services in Croydon, south London. Liberty Media Corp is the company's biggest shareholders. CONTACT: TELEWEST Richard Williams, Investor Relations Manager, Phone: +44 (0)20 7299 5479 Phone: +44 (0)20 7299 5495 E-mail: Richard_williams@flextech.co.uk Vani Gupta, Investor Relations Manager Phone: +44 (0)20 7299 5353 Phone: +44 (0)20 7299 5495 E-mail: vani_gupta@flextech TELEWEST: Shareholders Approve Disposal of Interest in SMG Plc -------------------------------------------------------------- Telewest Communications plc ("Telewest") announced Wednesday that the resolution regarding the proposed disposal of any or all of the Group's interest in SMG plc was passed at an Extraordinary General Meeting. Cob Stenham, chairman of Telewest said: "Any disposal of our interest in SMG plc would form part of our efforts to address the Group's funding position. We wish to preserve the Company's flexibility at a time of constrained capital markets and as we enter into restructuring discussions." He added: "Despite the uncertainties caused by the restructuring process, our underlying operational business continues to be sound and our commitment to our customers is unchanged." CONTACT: Jane Hardman, Telewest Communications plc Phone: 0207 299 5888 Sarah Tovey, Brunswick Phone: 0207 396 5388 TELEWEST: Expects Debt Negotiations to Proceed Quickly ------------------------------------------------------- Telewest Communications Plc expects negotiations with creditors over the company's GBP5.3 billion (US$8.3 billion) debts to hasten, Bloomberg reports citing Managing Director Charles Burdick. Burdick, who replaced Chief Executive Adam Singer last month, admits the alternative are few, says the report. There are plans to swap control with bondholders for GBP3.6 billion of debts. In August, the Company was allowed by the banks, from which it owed GBP1.8 billion, to start negotiating with bondholders. The swap is seen to result to the long-awaited merger with NTL, Telewest's U.K. cable rival, which has just emerged from Chapter 11 bankruptcy protection in the US. Telewest, together with NTL Inc., accumulated more than US$25 billion of debt building fiberoptic networks and acquiring rival businesses during the Internet boom. The Company lost more than EUR16.3 billion in market value due to low demand in their digital TV and Internet services. Shaers fell to 1.4 pence from 569.75 p in 2000. Meanwhile, the cable company denied yesterday's reports that it will cut 1,000 jobs after the 1,500 slashes it made in May, although it admitted the workforce may sink in the next few years. Telewest was founded in 1984 to provide cable-TV services in Croydon, south London. Liberty Media Corp is the company's biggest shareholders. CONTACT: TELEWEST Richard Williams, Investor Relations Manager, Phone: +44 (0)20 7299 5479 Phone: +44 (0)20 7299 5495 E-mail: Richard_williams@flextech.co.uk Vani Gupta, Investor Relations Manager Phone: +44 (0)20 7299 5353 Phone: +44 (0)20 7299 5495 E-mail: vani_gupta@flextech WESCOL GROUP: Halves Workforce While Struggling to Collect Cash --------------------------------------------------------------- Wescol on Wednesday served redundancy terms to 218 employees-- half of its workforce--as receivers began legal action to collect cash for the business, Times Online reports. The Group called in the receivers after it failed to obtain additional funding from its bank and from Salzgitter steel group that controls 26 percent of the steelmaker. The Company at the same time asks the Financial Services Authority to suspend securities while the Company assesses its financial position. The Group admitted its finacial troubles were aggravated by "slow payment on certain contracts and difficult industry conditions." In April, the company admitted it faces a "challenging" half-year ahead. Wescol employed Ernst & Young to chase up to GBP4 million in debts from 20 customers, which holds back final payments. Ernst & Young plans to go to arbitration to solve the matter. Speculations have it that its subsidiary Westok Structural Services may be sold; although Wescol itself may be sold "piecemeal," says the Times Online report. Market value of the Group was cut down the by GBP2.4 million by the report. Its shares also dropped from 5 3/4 to 1 1/2. Among Wescol's prestigious involvement in construction projects is the in the building of Greater London Assembly headquarters. To see the Company's Interim results: http://bankrupt.com/misc/WescolGroup.pdf WORLDCOM: Ruling to Drag on, Plea Negotiations Continue ------------------------------------------------------- Federal prosecutors have 30 more days to charge former Worldcom Inc. executive David F. Myers over his involvement in the company's accounting scandals, Washington Post reports. Myers lawyers agreed so that plea negotiations can continue. Worldcom executives were accused of manipulating the company's financial results since at least 1999. The Company is also being investigated by the Securities and Exchange Commission on charges of defrauding investors, and by at least two congressional committees. In July, the Company filed for creditor protection in a case tagged as the largest Chapter 11 bankruptcy filing ever. Meanwhile, two other former Worldcom Executives are set to enter pleas in federal courts on their supposed involvement in the alleged fraud at the company. Scott D. Sullivan, former chief financial officer who was fired in June, plans to plead not guilty says his lawyer. Buford Yates Jr., director of general accounting who resigned is the other concerned person. Lawyers representing the accused were not able to relay comments. Other names dragged to the scandal are Betty L. Vinson and Troy M. Normand, of which prosecutors plan to file court papers. Prosecutors were able to name the persons involved in the scandal partly through tracking papers, including e-mail and internal documents that detail transactions of the previous years. CONTACT: WORLDCOM INC. 500 Clinton Center Dr. Clinton, MS 39056 Phone: 601-460-5600 Fax: 601-460-8269 Toll Free: 800-976-5326 Home Page: http://www.worldcom.com *********** 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, Ma. Cristina I. Canson and 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 * * *